Long-time Credit Suisse shareholder Harris Associates reportedly sold its entire stake in the embattled bank
Harris Associates
- Long-time Credit Suisse shareholder Harris Associates has exited its entire stake in the bank, per the FT.
- The US investment firm was formerly the Swiss bank's biggest shareholder, and owned 10% of its stock as of August last year.
- Clients pulled billions from Credit Suisse last year as it fended off rumours of a Lehman-style collapse.
Long-time Credit Suisse shareholder Harris Associates, once its No. 1 investor, has exited its entire stake in the embattled Swiss bank over the past few months, according to a report by the Financial Times.
The Chicago-based investment management firm owned about 10% of the Swiss bank's stock as of August last year, but slashed its exposure to 5% in January, per Reuters. Now, Harris has cut its holdings in the lender to zero, the FT reported on Sunday.
The investment manager began paring its stake in October 2022, the FT report said, after Credit Suisse raised more than $4 billion in capital to fund a restructuring program aimed at cutting costs and headcount and reshaping its investment bank unit.
That's when the Saudi National Bank replaced Harris Associates as Credit Suisse's biggest shareholder, the FT said.
"There is a question about the future of the franchise. There have been large outflows from wealth management," David Herro, Harris Associates' deputy chairman and chief investment officer, told the FT.
"We have lots of other options to invest," added Herro, who was an avid supporter of the Swiss bank for years. "Rising interest rates mean lots of European financials are headed in the other direction. Why go for something that is burning capital when the rest of the sector is now generating it?"
Herro was referring to Credit Suisse clients pulling out as much as 111 billion Swiss francs (about $118 billion) from the bank in the final quarter of 2022, according to the FT. The outflows came as the lender fended off viral concerns about its financial health and suggestions that it was facing a Lehman-Brothers style collapse.
"We feel the plan to restructure the investment bank, while a noble cause, is cumbersome and far more costly in terms of cash burn than we expected," Herro said, per the FT.
"We were also not satisfied with what we were getting in terms of proceeds . . . from the sale of securitised products," he added.
Harris's pullout is more bad news for the beleaguered Credit Suisse, whose stock dropped 1.8% to $2.98 in US-listed premarket trading on Monday after falling to a record low last week when the bank reported its biggest loss since the 2008 financial crisis. The stock has plunged 56% in the past year.
"We are ahead of our plan and have clear strategic objectives. We are laser-focused on successfully executing our plan and on progressing toward our targets to ensure new Credit Suisse delivers sustainable value for all our stakeholders," Credit Suisse said in a statement to Insider.