Credit Suisse expects Q3 loss of US$1.6 billion from reclassifying loans

CREDIT Suisse expects to make a third-quarter loss of about US$1.6 billion from the reclassification of loans linked to its non-core and legacy businesses.

The bank, which is now part of UBS, said in a financial report on Friday (Sep 29) that it will also wind down certain management arrangements, which may result in a loss of up to US$600 million in the same quarter.

UBS agreed on Mar 19 to buy Credit Suisse for a knockdown price of three billion francs (S$4.5 billion), and up to five billion francs in assumed losses in a rescue orchestrated by the Swiss authorities. Switzerland’s second-largest bank was then on the verge of collapse.

Following the takeover, UBS divided Credit Suisse’s assets into those it would retain, and those it would place in a non-core and legacy division, to be wound down over time.

UBS’ vice-chairman Lukas Gehwiler said this month that it was possible that Credit Suisse could generate further losses in the second half of the year.

In the financial report for the first six months of 2023, the bank said it suffered net asset outflows of 100.3 billion francs from the end of 2022.

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The biggest outflow happened in the wealth-management business, where 74 billion francs in assets were withdrawn; money was withdrawn across all regions.

The Swiss domestic business suffered a net outflow of 14.6 billion francs as confidence collapsed in the bank, and panicked customers withdrew funds. REUTERS