Harris Associates, a former top Credit Suisse shareholder, sells out to bank

After losing patience with the bank’s strategy and persistent losses, one of Credit Suisse’s oldest shareholders sold all its stake.

Harris Associates, the US investment manager Harris Associates, was whose deputy chairman and chief investment officer David Herro was long among the most prominent supporters of Swiss bank. They owned up to 10% of Credit Suisse stock last year.

After the bank’s $4.3bn fundraising in October, Harris began to reduce its exposure. Then, Saudi National Bank replaced Harris as top investor and Harris had already divested.

“There are questions about the franchise’s future. He said that there have been large outflows in wealth management. This refers to the SFr111bn withdrawn from Credit Suisse customers during the last three months of 2022. Particularly after rumors emerged on social media about the bank’s financial health.

He said that there are many other investment options. “Rising interest rates means that many European financials are heading in the opposite direction. Why choose to invest in something that burns capital when other sectors are generating it?

Harris still holds shares in many European financial institutions including Intesa Sanpaolo and BNP Paribas, Julius Baer, Allianz, Lloyds Banking Group, Intesa Sanpaolo and Intesa Sanpaolo. As rising interest rates increase their profitability, lending margins and ability to pay dividends or buy back stock, Harris is more optimistic about their prospects.

Herro isn’t convinced Credit Suisse’s recent radical restructuring which includes spinning off its investment banking and beefing up its wealth-management business, can help turn around the fortunes the 167-year old lender.

Harris is particularly frustrated by the lack of transparency and cost of the investment banking spinoff deal with Michael Klein, a former board member — which will revive First Boston’s brand name — as well as the agreement to sell its securitised product business to Apollo.

Herro stated that the plan to restructure an investment bank is a noble cause but it’s too cumbersome and more expensive in terms of cash burn than expected. We were also unhappy with the amount of proceeds we received. . . From the sale of securitised goods

Credit Suisse stated it was “ahead” of its plan and maintained that it had “clear strategic goals”. Credit Suisse added: “We are laser-focused in successfully executing our plans and moving towards our targets to ensure that new Credit Suisse delivers sustained value for all our stakeholders.”

Credit Suisse reported last month a SFr7.3bn loss in 2022. This was its second consecutive loss and the largest since the global financial crisis. It also indicated that it would suffer a “significant” loss this year.

After a series of negative media stories about the bank’s inability to retain staff and customers assets, its shares fell to an intraday record low of SFr2.52 Thursday. The stock closed at SFr2.78, but is down 77% over the past 2 years.

Herro was an active participant in the share register, fighting for the former chief executive Tidjane Thiam’s retention and Urs Rohner as chair after Urs Rohner was implicated in a corporate spying investigation in 2019.

According to filings, Harris bought Credit Suisse stock first in 2002 at a price of less than SFr30. He then sold it all before 2008’s financial crisis at prices between SFr60-SFr70.

The company bought it back in 2009, when the price was around SFr23. It saw a great opportunity to capture a profit. The shares initially rose to SFr56 but have been steadily declining since then.

Harris had 37mn shares of the group by May 2012. They were worth just over SFr600mn at that time, but would now be worth SFr103mn today.

Herro stated that it had been a significant drag on our performance. It is not possible to win every time, it is the business that I am involved. You spend more time with your children than you meet any company. Credit Suisse has been a drain on time and value over the years.

The Saudi National Bank and the Qatar Investment Authority are the two largest shareholders of Credit Suisse. They each bought a 10% stake in the capital raising last fiscal year.

Another US investor to have reduced their stakes is Dodge & Cox from San Francisco, a $327 billion asset manager. In late 2020, Dodge & Cox had a peak at 5.11 percent. According to filing data. According to filing data, this figure now stands at 3.1%.

Artisan Partners, a top-five shareholder last year, bought into the group shortly after Antonio Horta Osorio was appointed as chair. The group has now completely sold its shares over the past six month.

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