Credit Suisse shares plummeted more than 20% at market open today on news that Saudi National Bank will not provide more funding to Credit Suisse, which is active in fintech investment.

Saudi National Bank would have to assume regulatory and statutory responsibilities if it owns more than 10% of Credit Suisse, Mike Sekits, co-founder and managing director of Strandview Capital and Btech Consortium, told Bank Automation News. 

“It’s very bright lines when you’re investing in a bank holding company, in terms of regulation, and when you cross certain thresholds,” Sekits said. “When you become a 10% owner in a bank, you become subject to Bank Holding Act regulations, and that’s not a line you want to cross.” 

The $724 billion Credit Suisse has dealt with fund mismanagement in the past. In 2022, the bank was fined $2.1 million by the Swiss Federal Criminal Court for “historical organizational inadequacies” related to money laundering from 2004 to 2008. 

Fintech fallout? 

On the heels of last week’s collapse of Silicon Valley Bank, fintechs like Melio, Rippling, and Ledge scrambled to retrieve their deposits. Credit Suisse has loaned billions to fintechs in the past few years, most recently to Taurus. Credit Suisse led the investment of Taurus, a platform for trading and investment of digital assets, helping raise $65 million with five other investor groups, per Crunchbase. 

Taurus did not respond to a request for comment by press time today. 

Other existing fintech clients of Credit Suisse include:  

• $1 billion raised for card and financial app Curve; 
• $250 million raised for buy-now, pay-later platform Sunbit; 
• $440 million raised for fintech investing platform iCapital Network; 
• An undisclosed amount raised for workflow and analytics platform Capital Markets Gateway; 
• $500 million raised for payment technology platform Nuvei; and 
• An undisclosed amount raised for payment platform Koalafi. 

Risk management, historic outflows 

“Credit Suisse has problems, because their auditor found seriously misleading financial statements in their accounts of past three years, which the SEC has called into question,” said Chris Skinner, chief executive at financial blog The Finanser. The opening statement in Credit Suisse’s annual report said the bank didn’t have effective internal risk management controls, he noted. 

In October 2022, the bank reported a potential loss of $1.6 billion due to “historic outflows” of $88 billion during its fourth-quarter earnings call, before the Saudi National Bank stepped in with funding. 

“They’re an investment bank, and they do very complex structured deals with high value and some of those have gone badly wrong clearly and they’ve lost money on them,” said Sam Everington, chief executive of Engine by Starling at London-based Starling Bank told BAN at FinovateEurope. 

Editor’s Note: All amounts in USD