‘Absolutely not’ were the words uttered last week by Saudi National Bank Chairman Ammar Al Khudairy when asked would the bank inject more capital into Credit Suisse. Fast forward four days and the subsequent chain of events resulted in Credit Suisse being taken over by UBS in an offer worth about SFr0.76 per share. Credit Suisse stock traded at SFr1.86 on Friday, having traded above SFr7 a year ago. Quite the haircut for equity investors, including the Saudis. The news was even less positive for certain bondholders, with Swiss Regulator, FINMA, instructing that SFr16bn worth of ‘additional tier one’ (AT1) bonds be written down to zero. 


Last week we wrote about the failure of SVB, this week the demise of Credit Suisse which was deemed a ‘globally systemic important bank’. Recent events serve as a healthy reminder that, irrespective of theories, processes, algorithms, and a raft of concepts that extoll the analytical nature of investing, it does remain an endeavour undertaken by people. And therefore, is subject to human led outcomes and the wisdom of the crowd is not infallible. Similarly, while active management is also not infallible, it does provide a framework to operate in, and the opportunity to be flexible, react – and ultimately outperform 


As always, if you wish to discuss anything in further detail, please do get in touch.