Saudi Arabia's PIF halts Swiss financial market investments over Credit Suisse fallout
RIYADH: Saudi Arabia's Public Investment Fund will no longer allocate capital to Switzerland's financial markets, two years after suffering losses from the collapse of Credit Suisse.
During the FII PRIORITY Europe Summit in Albania, PIF Gov. Yasir Al-Rumayyan said that the decision was driven by the manner in which Swiss regulators handled the 2023 government-backed rescue of Credit Suisse by UBS Group, reported Bloomberg.
The abrupt deal was executed without shareholders' approval, impacting investors across the Middle East.
PIF, one of the world's largest sovereign wealth funds, is reassessing its investment strategy amid growing concerns over regulatory stability and investor protection. The fund's decision to halt investments in Switzerland's financial markets marks a significant shift in its approach, underscoring the long-term impact of the 2023 Credit Suisse collapse on regional and institutional investor confidence.
PIF also continues to expand its footprint across Europe, signaling a redirection of capital.
'We're not going to invest in the financial markets in Switzerland. If you change something overnight and wipe out all of your investors, this is a big red flag,' Al-Rumayyan said, as reported by Bloomberg.
The remarks were made during an on-stage discussion with Noel Quinn, newly appointed chairman of Zurich-based Julius Baer Group Ltd.
Quinn responded: 'As the chairman of a Swiss bank as of 10 days ago, that concerns me.'
The 2023 acquisition of Credit Suisse was finalized rapidly following a sharp decline in its stock price.
The plunge became worse after former chairman of the Saudi National Bank, Ammar Al-Khudairy, said the bank would 'absolutely not' be open to further investments in Credit Suisse.
'The deal didn't receive approval from either Credit Suisse or UBS shareholders as regulators and lawmakers rushed to contain a crisis of confidence that was spreading across global markets,' according to Bloomberg.
At the time, shareholders from the Middle East, including SNB and the Qatar Investment Authority, collectively held around 20 percent of Credit Suisse.
SNB, which was the largest shareholder in the Swiss lender, had called on Credit Suisse to reject the offer from UBS, Bloomberg reported.
Other investors had cautioned that the Swiss government's decision to override standard merger procedures and sideline shareholder votes could deter institutional investors.
Legal analysts also warned that the rushed nature of the transaction had undermined Switzerland's standing as a reliable investment destination where the rule of law is safeguarded.
Al-Rumayyan's remarks came as PIF announced plans to open a subsidiary office in Paris and committed to doubling its investments in Europe to $170 billion by the beginning of the next decade.
The fund has already deployed approximately $85 billion across the region between 2017 and 2024, making strategic investments in key European economies, including the UK, France, and Italy.
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Arab News
an hour ago
- Arab News
‘Retailtainment' shaping growth of shopping malls in Saudi Arabia
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Speaking to Arab News, Olivier de Cointet, senior adviser at management consulting firm Arthur D. Little, said that shopping malls are set to thrive in the Kingdom as they evolve into social venues rather than mere shopping destinations. 'With retailtainment, which is the fusion of retail and entertainment, becoming an essential part of the customer experience, malls play a significant role in supporting the Kingdom's vision to become a business and tourist destination hub,' said Cointet. He added: 'These destinations enhance Saudi Arabia's appeal as a business and tourism hotspot and keep more consumer spending within the Kingdom.' Anthony Spary, head of retail, leasing, and offices at CBRE for the Middle East and North Africa region, echoed similar views, saying that shopping malls in the Kingdom could serve as social hubs for both locals and visitors, promoting cultural exchange and providing a platform for both international and homegrown brands. Today's consumer expects seamless integration between all channels, and this benefits physical as well as digital retail in terms of driving footfall, experience, and convenience. Sundeep Khanna, partner at ADL 'Malls often feature concepts such as family entertainment centers, cinemas, cultural events as well as unique anchor attractions, all of which will draw tourists and encourage repeat footfall with residents,' said Spary. Joe Abi Akl, partner and head of Oliver Wyman's Retail and Consumer practice for India, the Middle East and Africa, said that shopping malls in Saudi Arabia have allocated nearly half of their gross leased area to non-retail activities, which could help them serve as social and entertainment destinations. 'Shopping malls, with a pipeline exceeding 6 million sq. meters of GLA, play a vital role in this vision by offering integrated, experience-led environments. With more than 40 percent of mall space planned for non-retail activities, they're not just commercial centers, but social and cultural anchors that enrich the Kingdom's appeal as a leisure and lifestyle destination,' said Abi Akl. These comments align with Saudi Arabia's efforts to become a global hub for tourism and business by the end of the decade, with the Real Estate General Authority projecting the property market to reach $101.62 billion by 2029, representing a compound annual growth rate of 8 percent from 2024. Shaping retail spending CBRE's Spary said the rising number of shopping malls in the Kingdom is expected to boost retail spending as they provide consumers with convenience and a wide variety of product choices. 'Saudi Arabia offers a unique retail landscape in the region, providing a blend of strip malls, line retail, as well as community and regional shopping districts. This new wave of shopping malls will only add to this offering and create a more varied mix for the consumer,' added Spary. These views regarding consumer spending align with the findings of a recent report published by global consulting firm AlixPartners, which said the Kingdom's consumer market is evolving rapidly, characterized by adaptability, shifting spending patterns, and resilience in the face of global economic challenges. AlixPartners noted that the groceries and clothing categories are expected to remain key spending sectors in 2025, with consumers prioritizing value-driven deals and savings. Craig Watson, head of retail at JLL in the Kingdom, stated that the development of several high-quality retail centers will transform the consumer experience across Saudi Arabia, offering a wide array of choices and ultimately boosting overall spending. 'When regions go through extensive and rapid growth, the consumer is always the winner, with increased supply providing new and exciting concepts to experience. The retail mix, success, and execution of these places will ultimately determine the share of wallet and who benefits most,' said Watson. In February, during the Retail Leaders Circle, Abdellah Iftahy, senior partner at McKinsey and Co., said that the Kingdom's retail sector is undergoing a significant transformation, driven by a digitally savvy young population and increasing consumer confidence. He added that by 2035, 75 percent of retail spending is expected to come from the Saudi youth. E-commerce vs. shopping malls Although the growth of e-commerce in Saudi Arabia may pose challenges for traditional retail formats, it can also complement the development of malls in the Kingdom, according to experts. Watson notes that the Kingdom has emerged as a major e-commerce hub in the Middle East and North Africa, driven by its young, tech-savvy population and expanding internet coverage. He believes the growth of the e-commerce sector will not negatively impact the operations of shopping malls nationwide. • Strengthening the Kingdom's retail sector, including the development of shopping destinations, is one of the crucial goals outlined in the Vision 2030 program. • Riyadh is leading the Kingdom's retail transformation, with mall rents up 4 percent in a year and 2.2 million sq. meters of new retail space planned by 2030. 'As is the case with every region, the overwhelming majority of retail sales is derived from brick-and-mortar transactions. Malls will need to adapt by integrating technology, enhancing the customer experience and offering unique in-person experiences that cannot be replicated online,' said Watson. According to Spary, many consumers still prefer the tactile experience of shopping in person, and malls can integrate e-commerce by offering click-and-collect services. 'Malls can serve as experiential spaces where brands showcase their products, attracting customers who enjoy the physical shopping experience. Taking into account both cultural shopping preferences as well as the impact of the climate on consumer behavior, increasing e-commerce penetration will add to the overall omnichannel approach that retailers are adopting across the region,' said Spary. Sundeep Khanna, partner at ADL, said that the growth of the e-commerce sector is not cannibalising shopping malls, but is actually complementing them. 'Today's consumer expects seamless integration between all channels, and this benefits physical as well as digital retail in terms of driving footfall, experience, and convenience,' said Khanna. Attracting international brands Spary told Arab News that the transformation and upgrade of retail offerings in the market of Saudi Arabia will pave the way for new international brands to enter and grow within the Kingdom, contributing to the country's wider economic goals. According to the CBRE official, the entry of new brands will not only enhance consumer choices but also stimulate a competitive environment that encourages brand expansion and attracts investment. 'CBRE is currently seeing record levels of demand from international brands looking to expand into the region. This demand is likely to continue given the robust and ever-maturing nature of this market,' said Spary. Cointet noted that Saudi Arabia has become an attractive destination for global fashion, luxury, and food and beverage retailers, drawn by the population's strong spending power and the rise of premium mall spaces such as Riyadh Park and Mall of Arabia. 'Mall expansion goes hand-in-hand with pro-investment reforms — for example, Saudi Arabia now allows 100 percent foreign ownership in the retail sector, encouraging international companies and developers to invest directly,' added Cointet. The Arthur D. Little official further stated that the expansion of shopping malls in the Kingdom will also provide local brands with unprecedented opportunities to establish a national and international footprint. 'This is critical for developing the Saudi economy and I anticipate we will see more Saudi-owned brands enter the world stage in the coming years,' added Cointet. Potential challenges The experts also highlighted some of the challenges in Saudi Arabia's retail landscape, particularly surrounding shopping malls, including oversupply. 'Whilst there's certainly a risk of oversupply with many large projects due to be delivered over the course of the next two to three years, the need for continuous innovation and adaptation to changing consumer trends will be crucial for the sustainability of shopping malls in the Kingdom,' said Spary. The CBRE official further said that new attractions, entertainment options, and cultural elements will play a pivotal role in reshaping the retail landscape in the market. Spary added that the integration of these features will create a more engaging and immersive experience for consumers, ultimately redefining how shopping is perceived and enjoyed in the Kingdom. Cointet expressed a slightly different view, stating that the demand for malls in Saudi Arabia is expected to rise in the coming years due to population growth. He explained that this challenge could be addressed by developing large-format mega malls that serve as destinations in themselves, alongside smaller community malls designed to offer convenience at the local level. In April, a separate analysis by S&P Global said that oversupply, changing retail preferences, and pressure on rental yields amid elevated capital expenditure by landlords could exert pressure on the Kingdom's retail sector. According to the US-based agency, the volume of retail projects in the pipeline raises the risk of potential oversupply, particularly in secondary locations where demand may not be sufficient to absorb new retail spaces. Discussing the risk of oversupply, Cointet said: 'Saudi Arabia's aggressive development pipeline of new retail space underway — raises the risk of too much supply coming to market, which could pressure occupancies and rents in some areas, or even threaten the launch of some of the programs.' He added: 'Landlords and developers may need to differentiate their properties with unique experiences, dining, and entertainment offerings — and even offer lease incentives — to avoid saturation and keep shoppers engaged in an evolving retail landscape.'
Arab News
an hour ago
- Arab News
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Nicolas Boukhalil, PwC Middle East's energy, resources and sustainability deals leader, emphasized the benefits of opening the sector to international competition. • Saudi Arabia is poised to make major strides in water infrastructure, innovation, and resource management — key to securing supplies, boosting the economy, and advancing Vision 2030. • Saudi Arabia's approach includes deploying advanced, energy-efficient technologies such as reverse osmosis systems and integrating renewable energy sources into desalination and wastewater treatment plants. 'These partnerships are introducing new technology, improving efficiency, and making water more affordable for homes, businesses, and farmers alike. The result: a more sustainable financial model that eases pressure on public budgets and supports long-term economic growth,' he said. He also stressed the importance of distribution networks, stating, 'Producing water is only half the battle, getting it where it's needed is just as critical. That's why major investments are also going into water transmission networks, storage reservoirs, and smart management systems.' Hani Tohme, partner and Middle East and Africa sustainability lead at Kearney, shed light on the current wastewater situation. 'Saudi Arabia treats over 6.5 million cubic meters of municipal wastewater each day, yet only around 25 percent of that is reused, with wastewater network coverage reaching approximately 65 percent,' he said. The National Water Strategy aims to boost treatment and reuse significantly by 2030 — targeting treatment of up to 10 million cubic meters daily and reuse rates of 70 percent. Tohme explained: 'This enables groundwater preservation, supports industrial and agricultural reuse, and reduces dependency on energy-intensive desalination — which still provides 60 percent of urban water supply today.' Enhancing water security Saudi Arabia's expansion of desalination and water purification is a cornerstone of Vision 2030, reinforcing national water security and the Kingdom's broader transformation goals. Nada from ACWA Power sees investment in advanced desalination as a critical response to water scarcity that also promotes economic growth through job creation and industry development. 'Since its inception, ACWA Power has consistently been an early adopter of new technologies, in full cooperation and collaboration with the full ecosystem, led by KSA Water offtaker, SWPC, achieving 87 percent reduction in specific power consumption over the last decade. This commitment to innovation is reflected in the company's ongoing efforts to integrate sustainable and cost-effective water solutions,' Nada said. From Arthur D. Little's perspective, these initiatives boost economic diversification and elevate Saudi firms globally. The Kingdom's current desalinated water supply capacity stands at over 12 million m3/day with a target to reach approximately 20 million m3/day by 2030. Tariq Nada, executive vice president of the Center of Excellence at ACWA Power 'For businesses, this presents significant opportunities across engineering, clean technology, and supply chain localization — while for the nation, it reinforces resilience, global competitiveness, and leadership in addressing one of the 21st century's most pressing challenges: the sustainable management of water,' Strange explained. PwC also notes the alignment between the Kingdom's water strategy and Vision 2030's goals of economic diversification and sustainability. 'As global demand for desalination and sustainable water solutions rises, Saudi Arabia has the tools, talent, and ambition to become a world leader in water technology, creating new revenue streams while solving a shared global issue,' Boukhalil said. Kearney's Tohme emphasized the wastewater sector's growing role in attracting private investment. 'For businesses, this creates significant opportunities in EPC contracting, localization of technologies including membrane technologies, operations and maintenance, and treated water offtake agreements, particularly in industrial zones and giga developments,' he said. Evolution of water purification In 2025, Saudi Arabia is poised to make major strides in water infrastructure, innovation, and resource management — key to securing supplies, boosting the economy, and advancing Vision 2030. Highlighting upcoming developments, Nada said: 'In 2025, we anticipate an increased integration of renewable energy, with water desalination plants increasingly powered by solar energy and battery energy storage systems, further reducing their environmental impact and operational costs.' He added: 'We also expect to see a rise in the deployment of advanced membrane technologies, where next-generation membrane technologies will improve the efficiency and effectiveness of RO plants, reducing energy consumption and increasing water recovery rates.' Nada also pointed to the role of digital technologies: 'Digital technologies, such as AI, including machine learning, (will) enable real-time monitoring, optimization, and predictive maintenance of water purification plants.' Kearney's Tohme foresees three major shifts by 2025. He expects accelerated deployment of decentralized purification plants in underserved and remote areas, adoption of digital twins and predictive maintenance technologies to reduce operational costs and non-revenue water, and the strategic integration of treated water into agriculture and district cooling systems. He concluded: 'These trends are not just technical — they enhance Saudi Arabia's economic resilience by separating water supply from climate stress.'
Arab News
2 hours ago
- Arab News
Saudi Arabia's investments transform pilgrimage experience for millions
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