Harris Associates, one of Credit Suisse’s oldest major shareholders, sold its entire stake in the Swiss bank following losing patience with its strategy to end persistent losses and client exodus, reported the Financial Times on Sunday.
Harris, who had remained loyal despite a series of scandals within the group, revealed a stake of around 10% in the bank last August but reduced it to 5% in January.
Harris began trimming his exposure in October following Credit Suisse raised 4 billion Swiss francs ($4.27 billion) from investors, and when Saudi National Bank supplanted him as the lead investor, David Herro, vice chairman of Harris Associates, told the Financial Times.
“There is a question regarding the future of the franchise. There have been significant outflows from wealth management,” Herro said, as quoted by the newspaper. Credit Suisse reported a sharp acceleration in withdrawals in the fourth quarter, with outflows of more than 110 billion Swiss francs ($120 billion).
“We have many other options to invest,” he added. “Rising interest rates mean that a lot of European financial companies are heading in the other direction. Why go for something that burns capital when the rest of the sector is now generating it?”
Harris Associates did not immediately respond to a request for comment from Archyde.com.
In a statement emailed to Archyde.com on Sunday, Credit Suisse said: “We are ahead of our plan and have clear strategic objectives.”
“We are laser-focused on successfully executing our plan and making progress toward our goals to ensure that the new Credit Suisse delivers lasting value to all of our stakeholders,” the statement added.
Switzerland’s second-largest bank has also begun a major business overhaul, cutting costs and jobs to boost its fortunes, including creating a separate business for its investment bank under the CS First Boston brand.
Last month, Credit Suisse reported its biggest annual loss since the 2008 global financial crisis, following reeling clients withdrew billions from the bank, and warned it was set to suffer another “substantial” loss This year.
($1 = 0.9357 Swiss francs)
