Tens of billions of dollars were withdrawn from Credit Suisse in the first three months of 2023, according to the latest quarterly results announced by the bank on Monday, likely before its rival UBS acquired it.
The second largest bank in Switzerland recorded withdrawals of 61.2 billion Swiss francs ($68.6 billion) in the first quarter alone.
At the same time, the bank’s net profit rose to 12.4 billion francs, after a significant loss last year, thanks to the takeover of high-risk Credit Suisse debt, as part of the deal with UBS.
Investors were awaiting the results to see indications of the scale of the challenges that UBS faces. Credit Suisse said the “significant drawdowns of net assets” were particularly large in the second half of March, when panic set in ahead of the hastily made takeover.
He added in his return report, “Withdrawals calmed down, but the movement until April 24, 2023 had not returned to what it was.”
At the same time, the bank said its net profit rose to 12.4 billion francs.
As part of the massive merger between the two Swiss banks last month, the Swiss authorities demanded that 16 billion Swiss francs ($17.9 billion) of “additional first tranche bonds” (AT1) be worthless.
The decision by the Swiss Financial Market Supervisory Authority (FINMA) angered bondholders, who launched legal action against the regulator.
Credit Suisse said that its quarterly results were also strengthened by selling part of its securitized financial assets (the securitization is based on converting debts into sukuk and bonds and putting them on the market to obtain liquidity), to Apollo Global Management.
However, the bank said it incurred a pre-tax loss of a quarter of the CHF1.3 billion.
The bank, which last October launched a broad restructuring plan including the creation of its investment arm, said the branch suffered an adjusted pre-tax loss of 337 million in the first quarter.
And he warned that “in light of the merger announcement and the negative impact on revenues (…) and restructuring fees and financing costs,” it is expected that it will record “tangible” losses in the second quarter and in general at the level of all of 2023.
Monday’s quarterly report could be Credit Suisse’s last, depending on how long it takes to finalize the merger with UBS.
Credit Suisse has been exposed to a number of scandals in the past years, and after the collapse of three local US banks sparked panic in the financial markets, the bank seemed the weakest link in the chain.
