Beleaguered financial institution Credit Suisse might just get a shot in the arm thanks to potential investments into CS First Boston, its new investment bank.

Among CS First Boston’s potential investors is Saudi crown prince Mohammed bin Salman who is contemplating an investment of at least $500 million to back the new bank and its incoming chief executive officer Michael Klein.

Klein’s involvement in the Credit Suisse spin-off is seen as one reason why Prince Mohammed is considering it as a potential investment. Previously, Klein advised the Saudi Royal Family on several successful deals, including the Saudi Arabian Oil Company’s initial public offering (IPO) back in 2019.

The prince himself has, likewise, encouraged his countrymen to invest their money into a diverse range of industries, including the manufacturing of electric vehicles, application development, social media, and even professional sports. As a result, Saudi Arabia has become an influential power in the global business scene.

Greater Saudi Involvement in Global Finance

While Credit Suisse has yet to receive a formal notice of investment from Prince Mohammed, it should be noted that the Saudi National Bank is set to become its biggest shareholder. 

Upon the completion of the sale of Credit Suisse stocks worth $4.2 billion this week, the Saudi bank will hold a 9.9% stake in the Swiss institution. 

According to bank chairman Ammar al-Khudairy, the investment is expected to improve deal-making and bring greater knowledge of global banking to Saudi Arabia. Al-Khudairy added that his bank could also invest in CS First Boston in the near future.

Why is Credit Suisse Creating a Spin-off?

Over the past several months, Credit Suisse has been reeling from a series of scandals, immense losses, and regulatory issues that have severely impacted its standing on the global financial scene. Hence, the creation of CS First Boston is seen as a way by which it could have a fresh start under an entirely new entity.

Based in New York, CS First Boston is expected to remain untouched by its parent company’s losses and legal struggles, but the new bank’s name may not be entirely unfamiliar to banking sector veterans. Back in the 1970s, First Boston was the entity that brought Credit Suisse to the forefront of the global banking industry even as it expanded its operations beyond Switzerland. 

However, critics feel it may take a while to disassociate the new entity from Credit Suisse’s currently tarnished reputation.