State investment funds on the rise: Credit Suisse and the bad omen for the market economy
The Saudi National Bank is now Credit Suisse’s largest shareholder. The Alfred Escher Bank, which was supposed to be a monument to a liberal market economy, is now a partially nationalized financial group with owners in the Middle East.
The largest shareholder in Credit Suisse is now the Saudi National Bank with a stake of 9.9 percent. It indirectly belongs to the Saudi royal family. There are good reasons to be bothered by this. The social and political values that apply in Saudi Arabia have little in common with the local democratic value system.
But this moral criticism is hypocritical. The Saudis’ petrodollars are in numerous well-known companies in almost all western industrialized countries. Saudi Arabia operates one of the largest sovereign investment funds in the world. Money doesn’t go down. But even hardened capitalists have reason to be critical of the Saudi investment.
In principle, Credit Suisse is a partially nationalized bank. Around 15 percent of the shares belong to the Sheikhs of Saudi Arabia and Qatar. If the Swiss government had taken such a stake in the bank, there would have been a national outcry on both the left and right political camps – and rightly so.
The success of a free market economy is not based on a central plan, but on the self-interested initiative of many individual actors. Experience teaches us that this seemingly chaotic system produces the best results for overall prosperity. It should therefore give us all food for thought that the world’s sovereign wealth funds have now become the largest investors in many western economies. That doesn’t bode well for us or for Credit Suisse.