The encyclopedia · Trading & Investing · Financial decision · 2022–2023
Qatar Investment Authority lost $300M on Credit Suisse — a sovereign fund's bad bet
Qatar's sovereign wealth fund lost $300M on its Credit Suisse investment when the Swiss bank collapsed in 2023 and was taken over by UBS.
Qatar Investment Authority · Credit Suisse · 2023-03
What happened
The Qatar Investment Authority (QIA) was one of the largest sovereign wealth funds in the Middle East and a long-standing investor in Credit Suisse. QIA had been a major shareholder in the Swiss bank for over a decade, having first invested during the 2008 financial crisis.
When Credit Suisse's financial condition deteriorated rapidly in 2022-2023, QIA participated in the bank's capital raise, investing additional funds. However, the bank's problems proved insurmountable, and in March 2023, Credit Suisse was forced into an emergency takeover by UBS, orchestrated by Swiss regulators.
QIA lost approximately $300 million on its Credit Suisse investment. The loss was smaller than Saudi National Bank's $1 billion hit, but still substantial for a sovereign wealth fund that had been a long-term supporter of the Swiss bank. The case highlighted the risks that even sophisticated sovereign investors face when backing a troubled financial institution.
Why it happened
- QIA was a long-standing Credit Suisse investor that had already committed significant capital and chose to double down during the bank's final capital raise.
- The Swiss bank's problems — including the Greensill, Archegos, and spying scandals — were too deep to be resolved by additional capital, making any new investment a high-risk bet.
- The emergency UBS takeover, orchestrated by Swiss regulators, wiped out a significant portion of Credit Suisse's equity value, including the QIA's stake.
The lesson
When a bank has been scandal-ridden for a decade, investing more money is not a vote of confidence — it is throwing good money after bad.
Sources
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