First Quarter Sees Over $68 Billion Withdrawn from Credit Suisse

Credit Suisse has reported that over $68.7 billion worth of assets left the bank in the first quarter of 2023. The majority of the outflows were from its wealth management division and occurred across all regions. These outflows amounted to approximately 5% of all the bank’s assets under management. Credit Suisse expects to report a substantial loss before taxes in the second quarter and fiscal 2023. However, the quarterly report released on Monday could be Credit Suisse’s last, depending on how long it takes to finalize the merger with UBS.

The Swiss government arranged for Credit Suisse’s takeover by UBS after the bank rapidly collapsed. Emergency laws were used to push the deal through, and state guarantees were issued for the risk that UBS would take on. By March 31, Credit Suisse had net borrowings of CHF 108 billion under credit support provided by Switzerland’s central bank guarantees, which were a pillar of the rescue plan that helped avoid a possible collapse of the bank.

Credit Suisse also reported that its first-quarter net income attributable to shareholders was CHF 12.43 billion, compared to a loss of CHF 273 million the previous year. Pre-tax income was CHF 12.76 billion, compared to a loss of CHF 428 million a year ago. However, this figure can be mainly explained by high-risk bonds worth around CHF 15 billion being written down to zero, benefiting the bank’s nominal bottom line but infuriating investors. The step was ordered by Swiss Financial Market Supervisory Authority FINMA as part of the merger, but investors have since launched legal action against the regulator.

The takeover of Credit Suisse by UBS is expected to be completed in the coming months, and it was designed in part to help stabilize the global financial system that was first rocked by the collapse of two US banks before investors turned their eyes to the Swiss lender’s stability. UBS plans to scale back Credit Suisse’s investment bank, and Swiss media reported that UBS was considering laying off up to 30% of its workforce after taking over Credit Suisse. Prior to the merger, the number of employees at UBS and Credit Suisse was around 72,000 and 50,000, respectively. UBS has already said Credit Suisse would continue to operate under its own name in Switzerland for the foreseeable future.