Credit Suisse Reports Decline in Customer Deposits and Asset Outflows Amid Merger with UBS
Credit Suisse, one of the largest banks in Switzerland, has reported a decline in customer deposits worth CHF 67 billion ($75.2 billion) in the first quarter of 2023. The outflows of deposits were most acute in the days immediately preceding and following the announcement of the bank’s merger with UBS, which raised concerns about its health among customers. The bank also witnessed significant non-renewals of maturing time deposits. Although outflows have since stabilized to much lower levels, they have not yet reversed as of April 24, 2023. Credit Suisse’s flagship wealth management division saw assets under management fall to CHF 502.5 billion at the end of March, almost 29% lower year-on-year.
The outflows have been a significant challenge for UBS as it tries to integrate Credit Suisse. The bank faces “a huge amount of risk” in the process, warned UBS Chairman. The Swiss authorities rushed together a $2.7 billion rescue package, under which UBS agreed to take over Credit Suisse for three billion francs in stock and assume up to five billion francs in losses. The deal also included 200 billion francs in state financial guarantees.
Credit Suisse also reported net asset outflows of CHF 61.2 billion ($68.7 billion) in the first quarter, which amounted to about 5% of assets under management. The outflows were most significant in the second half of March 2023, across all businesses. In Asset Management, net asset outflows in 1Q23 represented 3% of assets under management reported at the end of 4Q22. In the Swiss Bank, net asset outflows represented 1% of assets under management reported at the end of 4Q22. In Wealth Management, net asset outflows in 1Q23 represented 9% of assets under management reported at the end of 4Q22.
The outflows were triggered by growing concerns over the health of the global banking market after the surprise collapse of the California-headquartered tech and venture capital lender Silicon Valley Bank. Clients started rapidly pulling money from scandal-plagued Credit Suisse, which eventually led to its rescue takeover by UBS. While Credit Suisse said it would work closely with UBS to ensure the completion of the transaction in a timely manner, the consummation of the merger remains subject to customary closing conditions.
0. “Depositors pulled $75 billion from Credit Suisse as it veered toward collapse” CNN, 24 Apr. 2023, https://www.cnn.com/2023/04/24/investing/credit-suisse-bank-withdrawals-total/index.html
1. “Credit Suisse says £55bn 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. “Credit Suisse outflows continue as £55bn was withdrawn in first quarter” This is Money, 24 Apr. 2023, https://www.thisismoney.co.uk/money/markets/article-12006811/Credit-Suisse-outflows-continue-55bn-withdrawn-quarter.html
3. “Credit Suisse lost US$68B in assets last quarter amid banking challenges” Global News, 24 Apr. 2023, https://globalnews.ca/news/9646037/credit-suisse-quarter-losses
4. “Withdrawals of £55bn forced Credit Suisse to seek rescue from UBS” The Times, 24 Apr. 2023, https://www.thetimes.co.uk/article/withdrawals-of-55bn-forced-credit-suisse-to-seek-rescue-from-ubs-lln0q0wzr
5. “UBS GAAP EPS of $0.32, revenue of $8.74B, strong liquidity and capital amid uncertain mark” Seeking Alpha, 25 Apr. 2023, https://seekingalpha.com/news/3959465-ubs-gaap-eps-of-032-revenue-of-874b
6. “Credit Suisse Terminates Acquisition of The Klein Group” Traders Magazine, 25 Apr. 2023, https://www.tradersmagazine.com/featured_articles/credit-suisse-terminates-acquisition-of-the-klein-group