MercoPress. South Atlantic News Agency

Subprime blues: Qatar sovereign fund buys into Credit Suisse

The Qatar Investment Authority purchases shares from Credit Suisse and is planning to invest up to 15 billion US dollars in European and US banks in the next twelve months, announced Monday Qatar Prime Minister according to Bloomberg News.

"We have a close relation with Credit Suisse and have acquired some shares in the market, but I can't give an idea of the percentage since we're still in the process", said Sheikh Hamad bin Jassim bin Jabr al-Thani who is also head of the sovereign wealth fund. Under Swiss banking rules, Credit Suisse would have to disclose any stake above 3%. Last week Credit Suisse revealed 1.2 billion US dollars in investment write-downs during the fourth quarter and a 72% fall in profits from last year. Its total write-downs now stand at $1.8 billion. Sovereign wealth funds, which were once feared for the political influence they could wield, are now being seen as a stabilizing influence on global financial markets. With massive cash reserves from oil and trade surpluses and long-term investment horizons, they have been busy picking up financial stocks on the cheap, and offering some of the world's leading banks crucial capital injections to help them ride out multi-billion dollar investment write-downs from the subprime crisis. An investment from a sovereign wealth fund can also be a crucial confidence-booster for a bank like Credit Suisse, whose American depository receipts (ADRs) have declined by nearly third since August last year. Last month, the Qatar Investment Authority announced plans to spend 15 billion US dollars acquiring stakes in European and U.S. banks, whose shares have fallen sharply since August when the potential scale of their subprime crisis become apparent. Several US banks have attracted the largest investments from sovereign wealth funds so far, including Citigroup, Merrill Lynch, and Morgan Stanley. However as European banks have begun to disclose larger write-downs on assets linked to the U.S. mortgages, they are expected to look for similar investments too. Last December Singapore (sovereign) Investment Corporation and an unidentified Middle Eastern investor sank 11.5 billion into Union Banque Suisse, UBS. The Swiss investment bank has written down 14 billion US dollars to date and last week announced the largest ever quarterly loss of a bank. The subprime mortgage crisis has forced write-downs of over 100 billion US dollars in the global banking system but this is expected to grow. According to Bloomberg last week analysts at UBS predicted that there could be a further 203 billion US dollars in write-downs from banks around the world.