Over US$68 billion withdrawn from Credit Suisse ahead of UBS takeover

MORE than US$68 billion had been withdrawn from Credit Suisse in the first three months of 2023, the bank said on Monday (Apr 24) in what are likely its final quarterly results before it is swallowed by rival UBS.

Switzerland’s long-time second-largest bank saw 61.2 billion Swiss francs (S$91.7 billion) withdrawn in the first quarter alone.

At the same time, the bank’s net profit increased to 12.8 billion francs, up from a significant loss a year earlier, mainly as a result of its high-risk debtors being wiped out in the emergency takeover deal.

Investors had been eagerly awaiting the results as they seek clues to the magnitude of the challenges facing UBS, which was strongarmed last month by Swiss authorities into the mega merger.

Credit Suisse said the “significant net asset outflows” were particularly heavy in the second half of March, as it was engulfed by panic prior to the hastily arranged takeover by its larger domestic competitor.

“These outflows have moderated but have not yet reversed as of Apr 24,” the bank said in its earnings statement.

The outflow numbers did not come as a complete surprise, however.

US financial services firm Morningstar said last week that data it had compiled suggested the bank had around 4.6 billion euros (S$6.8 billion) withdrawn from funds during March alone, marking the biggest monthly outflow on record.

Credit Suisse had suffered a string of scandals over several years, and after three US regional banks collapsed in March unleashing market panic, it was left looking like the weakest link in the chain.

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Over the course of a nerve-racking weekend, Swiss authorities organised an emergency rescue, pressuring UBS to agree to a US$3.25-billion mega merger on the evening of Mar 19.

Justifying the move to parliament earlier this month, Swiss President Alain Berset said “without intervention, Credit Suisse would have found itself, in all likelihood, in default on Mar 20 or 21“.

In 2022, Credit Suisse suffered a 7.3-billion-franc loss, with 110.5 billion francs in outflows in the final quarter alone.

That stood in stark contrast to the US$7.6 billion profit raked in by UBS last year.

Monday’s quarterly report will likely be Credit Suisse’s last one, depending on how long it takes to finalise the merger with UBS, which will present its results Tuesday. AFP