Status: 04/24/2023 09:59 am
Before being taken over by UBS, Credit Suisse continued to struggle with billions in outflows. The billions in profit reported is related to the emergency measures taken by the central bank.
In the first quarter, customers of the ailing Credit Suisse continued to withdraw billions. The major Swiss bank, which is about to be taken over by UBS, announced a net outflow of CHF 61.2 billion. Assets under management shrank to CHF 1.25 trillion after CHF 1.29 trillion at the end of 2022.
The outflows were particularly high in the days immediately before and after the announcement of the merger with UBS, according to Credit Suisse. Since then, however, they have stabilized at a significantly lower level. “However, no trend reversal was observed until April 24, 2023.”
Quarterly profit only due to emergency takeover
For the first quarter, the institute reported a net profit of CHF 12.4 billion. However, this was not achieved in the operational business, but is due to the emergency measures taken in March: “The results for the first quarter of 2023 mainly reflect the write-down to zero of additional Tier 1 (AT1) instruments in the amount of CHF 15 billion as of the by the Swiss Financial Market Supervisory Authority (Finma) with regard to the planned merger,” said Credit Suisse. The write-off of the securities, also known as “CoCo-Bonds”, caused considerable resentment among the bank’s creditors and is probably still being legally processed.
Adjusted for special factors, the pre-tax loss was CHF 1.3 billion. The money house also announced a significant pre-tax loss for the second quarter that had just started and for the year as a whole.
Central bank supports with billions
At the end of March, the institute, which was struggling due to a crisis of confidence, had drawn on CHF 108 billion in net liquidity support from the Swiss National Bank (SNB). To date, Credit Suisse has repaid ten billion of them. Overall, they and UBS could access aid from the state and the SNB of up to around CHF 260 billion as part of their merger.
Credit Suisse also announced that the proposed revival of investment bank CS First Boston had died. Originally, the bank had planned to take over the investment business of M. Klein & Co. for around 175 million US dollars, spin off the entire investment business and later take it public.