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February 1, 2013 6:29 pm
Credit Suisse granted a regulator-approved interim loan to Qatar at the height of the financial crisis, in a sharp contrast to allegations over an undisclosed loan provided by UK bank Barclays to the same investor.
The Swiss bank gave the loan for its SFr10bn capital raising in October 2008, the same month as Barclays’ second cash call, highlighting different approaches the banks appear to have had to such arrangements at the time.
Credit Suisse’s financing arrangement was disclosed and approved by Swiss regulators, two people close to the situation said.
The Financial Times on Thursday revealed that the UK’s Financial Services Authority and the Serious Fraud Office are investigating whether Barclays gave a loan to Qatar to fund its cash call in 2008 that enabled it to avoid a state bailout.
In Credit Suisse’s case, the loan to pay for a significant amount of the private placement was used to bring forward the capital increase by a few weeks so that it could be announced at the same time as rival UBS’s state bailout.
It came about because Switzerland’s regulators wanted to avoid weeks of market uncertainty over Credit Suisse in the aftermath of the UBS rescue package.
The interim financing was paid back within weeks and did not give Qatar any advantage over the other, smaller investors in the private placement.
Credit Suisse declined to comment but referred to the press release from October 2008, in which the bank said: “Credit Suisse is providing financing for an interim period for a portion of these investments.”
The regulators’ permission – and even encouragement – for an interim loan highlighted the alarmist mood in the weeks and months after the collapse of Lehman Brothers which sent the financial system into a tailspin.
A loan by a bank to a shareholder to finance its own capital increase would normally not be allowed by the Swiss regulator, but it made an exception in order to avoid a market panic in the aftermath of the UBS bailout. Finma, the Swiss banking regulator, declined to comment.
Analysts said the other apparent difference to the allegations over Barclays is that Credit Suisse disclosed the financing.
“Barclays is not alone in having followed this route in getting investors on board during the crisis,” analysts at Mediobanca said in a note.
“This is a fairly common practice, but the concern is around whether this was properly disclosed at the time,” they added.
The identity of the borrower and the size of Barclays’ loan remains unclear, but one person close to the situation said Qatar Holding was not its recipient.
Qatar Holding was one of two Qatari investors that participated in Barclays’ two cash calls in 2008. The other one was Challenger, an investment vehicle of Sheikh Hamad bin Jassim bin Jabr al-Thani, the prime minister of Qatar, and his family.
Qatar Holding, the FSA and SFO as well as Barclays all declined to comment, while Challenger could not be reached for comment.
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