Credit Suisse confirmed this Monday that it suffered a “significant loss” of assets during the collapse that it experienced in the first quarter of the year and that culminated in its rescue by UBS. Specifically, the entity acknowledged that it lost US$51.2 billion Swiss francs (US$68.6 billion) in assets from January to March and the problem is that the bleeding has not yet stopped.
“These departures have moderated, but have not yet reversed as of April 24, 2023,” revealed Credit Suisse in the presentation of its quarterly results, whose publication has brought forward three days and is expected to be the last, since the merger with UBS could be completed soon.
The bank has said that assets under management by the wealth management division had fallen to 502.5 billion francs at the end of March, from 707 billion in the same period a year earlier.
Clients quickly withdrew their money from Credit Suisse after it was caught up in market turbulence sparked by the bankruptcy of US lenders Silicon Valley Bank (SVB) and Signature Bank. Just a few weeks ago, the bank’s president, Axel Lehmann, apologized for the collapse and acknowledged that they had not been able to “stop the loss of confidence”, something that the numbers presented by Credit Suisse have now confirmed.
Nevertheless, The bank posted net attributable profit of 12.43 billion Swiss francs in the first quarter of 2023, compared to a loss of 273 million between January and March of the previous year.r, due to the controversial writedown of 15 billion Swiss francs of AT1 bonds by the Swiss regulator (Finma) as part of the agreement with UBS. Adjusted loss before tax for the quarter was 1.3 billion Swiss francs.
Revenue for the period amounted to 18,467 million francs, compared to 4,412 million in the same period of 2022. Likewise, the group’s CET1 capital ratio increased to 20.3% at the end of the first quarter, compared to 13.8% of the same period of the previous year.
On March 19, in urgent negotiations orchestrated by the Swiss authorities, it was agreed to buy Credit Suisse, the second largest Swiss bank, by its rival and largest bank in the country, UBS, in order to avoid the collapse of the entity. The agreement was sealed for a value of 3,000 million Swiss francs, in an operation in which the Swiss government guarantees 100,000 million francs for the liquidity of the bank and will assume up to 9,000 million francs in possible losses.
The acquisition is expected to be completed by the end of this year, if possible, but the full absorption of Credit Suisse’s business into the UBS Group is expected to take three to four years.
“The turmoil in the banking sector, which ultimately led to a bailout deal for the Swiss lender by UBS, has caused a significant exodus of clients amid uncertain prospects for the lender. However, Credit Suisse had long been going through difficulties before the arranged wedding” highlights Victoria Scholar, investment manager at Interactive Investor.
Source: Ambito
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