(AOF) – Saudi Arabia’s Crown Prince Mohammed bin Salman and a US private equity firm, Atlas Merchant Capital, led by former Barclays chief executive Bob Diamond, are among the investors preparing to invest $1 billion or more in new investment bank Credit Suisse, people familiar with the matter told The Wall Street Journal.
Crown Prince Mohammed bin Salman is considering an investment of around $500 million to support the new unit, CS First Boston, and its designated CEO, Michael Klein, some of those interviewed said.
When presenting its new strategy at the end of October, Credit Suisse indicated that its capital markets and investment banking advisory activities will be combined, following a transition period, under the CS First Boston banner. Independent, the future CS First Boston plans to attract third-party capital and will have a privileged long-term partnership with Credit Suisse.
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The negative effects of rising interest rates
The rise in interest rates normally causes an increase in bank income through the loans granted. In Europe, according to a survey conducted by S&P among 85 banking establishments, the sector expects an average increase of 18% in its net interest income. However, this new inflationary context also has undesirable effects, in particular an increase in refinancing costs. It is also accompanied by the fear of a new recession, which would then affect all the bank’s businesses, ranging from loans to asset management, whose income is correlated to market valuations. Reassuring element: the banks of the euro zone are sufficiently solid to face a deterioration of their environment.
