Credit Suisse Group AG has suffered outflows of CHF 61.2bn ($69bn) in the first quarter of 2023, in addition to the CHF 110.5bn taken out in the fourth quarter of 2022. The bank has also taken a large writedown at its wealth management unit, marking a nine percent decline from the assets under management (AuM) level at the end of last year. The outflows were “most acute” in the days immediately after the emergency takeover of Credit Suisse by UBS Group AG was announced. According to the statement, if the agreement with UBS fails, Credit Suisse could face difficulties in maintaining its current position.[0]
Credit Suisse reported 47.1 billion francs of net outflows at the key wealth management unit, and said a 1.3 billion franc impairment charge was mostly related to that business. According to its earnings report, the bank stated that although outflows have decreased, they have not yet completely turned around. The Swiss unit saw a further 6.9 billion francs of outflows, mostly at the private clients business.[0] The bank’s liquidity position is still depending on the Swiss National Bank’s granted access to significant credit facilities.[0] As of March, the net amount of borrowings under these facilities amounted to CHF 108bn after repayments of CHF 60bn in the quarter, with further repayments of CHF 10bn as of Monday.[0]
The overall drop in assets and deposits in the first quarter is likely to knock income and fees, contributing to what is likely to be a “substantial loss before taxes” for the group in the second quarter and 2023 overall.[1] The potential job cuts at Credit Suisse due to UBS’s assessment of the business post-acquisition could cause problems for its employees.[1]
Credit Suisse anticipates a significant loss before taxes for both the investment bank and the Group in the second quarter and full year due to the merger with UBS, negative revenue effects resulting from the exit of non-core businesses and exposures as previously disclosed, restructuring expenses, and funding expenses.[2] The Swiss Financial Market Supervisory Authority, or FINMA, is keeping a close eye on the situation.[3]
Credit Suisse’s flagship wealth management wing saw its assets under management drop by almost 29%, versus the same period last year, down CHF 502.5bn.[4] The outflows are continuing even in the wake of the rescue by UBS.[5] The bank says the outflows have moderated but have not yet reversed as of 24 April 2023. According to the statement, the outflows during the first quarter equaled 5% of the assets under management.[6] The challenge for UBS now is to retain key clients and assets after the emergency takeover of its biggest rival.[7] The update from UBS is scheduled for Tuesday.[0]
0. “Credit Suisse Outflows Show UBS’s Test: EMEA Earnings Week Ahead” Yahoo Finance, 24 Apr. 2023, https://finance.yahoo.com/news/ubs-game-plan-credit-suisse-073000520.html
1. “Credit Suisse says $68bn left bank in lead-up to rescue by UBS” The Guardian, 24 Apr. 2023, https://www.theguardian.com/business/2023/apr/24/credit-suisse-says-68bn-left-bank-in-lead-up-to-rescue-by-ubs
2. “AT1 Write-Down Boosts Credit Suisse’s Net Income” finews.com, 24 Apr. 2023, https://www.finews.com/news/english-news/56953-credit-suisse-lorem-ipsum-first-quarter
3. “Credit Suisse Q1 Figures Underscore Financial Pains; UBS Risk Chief Delays Departure” Wealth Briefing, 24 Apr. 2023, https://www.wealthbriefing.com/html/article.php?id=197738
4. “Credit Suisse suffers CHF 61.2bn outflows Q1 2023” International Investment, 24 Apr. 2023, https://www.internationalinvestment.net/news/4112650/credit-suisse-suffers-chf-61-2bn-outflows-q1-2023
5. “Early Morning Call: Credit Suisse saw CHF 61 billion in Q1 outflows” https ://www.ig.com, 24 Apr. 2023, https://www.ig.com/en/news-and-trade-ideas/early-morning-call–credit-suisse-saw-chf-61-billion-in-q1-outfl-230424
6. “Credit Suisse outflows topped $68 billion as the bank veered towards collapse” WRAL News, 24 Apr. 2023, https://www.wral.com/story/credit-suisse-outflows-topped-68-billion-as-the-bank-veered-towards-collapse/20825831/
7. “Credit Suisse Saw $69 Billion of Outflows in Frantic Quarter” Bloomberg, 24 Apr. 2023, https://www.bloomberg.com/news/articles/2023-04-24/credit-suisse-saw-69-billion-of-outflows-in-frantic-quarter