Suits on Credit Suisse over failures

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KUWAIT CITY, April 29: According to informed sources, the Public Institution for Social Security has given permission to at least two of its foreign portfolio managers to file lawsuits against Credit Suisse on the grounds of concealing information and not disclosing how the bank was affected, as its business was affected more than the rest of the banks that process a variety client base, reports Al-Rai daily. The sources explained that the volume of the institution’s exposure to the US Silicon Valley Bank “SVB”, which also collapsed, is approximately USD 165 million, of which about USD 130 million is fully guaranteed.

This means that it will not be classified as an investment subject to erosion due to the bank’s bankruptcy. The managers obtaining judicial permission does not mean that only two cases will be filed in the name of the Public Institution for Social Security on Credit Suisse, as the permission gives them the opportunity to file multiple cases if they find it due, according to the investments directed by them and their type, in a way that guarantees the institution’s right.

The “Social Security” managers exposed to “Silicon Valley” reassured the institution’s officials that they have priority to fully access the USD 130 million, as 100 percent guaranteed investments in the bank. As for the USD 35 million that are still facing recovery risks and then the possibility of accounting classification within the institution’s non-existent assets, the transfer is still open in this regard between the “Social Security” and their managers. The sources did not rule out that the “Social Security” would judicially deduct “Silicon Valley” through its relevant managers for an amount of USD 35 million if there was a judicial need for that.

The amount of exposure to “Credit Suisse” was not specified, although it is likely to be limited. Within the very conservative “Social Security” policy, more than appropriate levels of precautionary reserves will be built to cover any possible defaults in its foreign investments in Silicon Valley and Credit Suisse. Caution in building reserves will also include any external investments of the Institution facing pressure due to fluctuations in global markets. It is noteworthy that the Swiss authorities announced last March that UBS had acquired Credit Suisse for 3 billion Swiss francs (USD 3.23 billion), in a move facilitated by the Swiss federal government to avoid further turmoil that shook the global banking services market due to the collapse of Credit Suisse, which followed the collapse of three US banks.

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