In the first three months of the year, Credit Suisse lost 67 billion Swiss francs ($75.2 billion) in customer deposits, and money is still leaving the bank as UBS rushes to finish a rescue of its struggling rival. The days immediately preceding and following the news of the takeover by UBS (UBS) on March 19 were “most acute” for the bank run, according to a statement released by Credit Suisse on Monday.
Afterward, outflows “stabilized to much lower levels, but had not yet reversed as of April 24, 2023,” the bank added. The first quarter net asset outflows for Credit Suisse (CS) were 61.2 billion francs ($68.7 billion), which includes some deposits. This amounts to roughly 5% of the assets managed.
The troubled banking was acquired by UBS last month in an emergency deal arranged by the Swiss government, and its first-quarter earnings maybe it is the last. The transaction has already received full or partial approval from regulators in Switzerland, the United States, and the United Kingdom.
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The merger, in the opinion of Swiss authorities, provided the finest opportunity to reestablish stability in the world banking industry, which had been shaken by the failure of two US regional banks. In recent years, Credit Suisse had had a string of scandals and compliance lapses that destroyed its business and cost it clients.
In the final three months of 2022, when the bank was beset by social media rumors that it was about to fail, customers withdrew 111 billion francs ($121 billion). A new wave of asset flight was sparked by the fall of Silicon Valley Bank and Signature Bank in America months later as investors and clients looked for safer havens.
Credit Suisse reported a first-quarter loss of 1.3 billion francs ($1.5 billion), continuing a losing trend that started in 2021. The bank experienced its largest annual loss since the financial crisis of 2008 in 2022, posting a loss of 7.3 billion Swiss francs ($7.9 billion).
Credit Suisse clients pulled about $53 billion from its wealth unit during the first quarter. Much of that didn’t end up with UBS, suggesting clients that had accounts with both banks are seeking to reduce their exposure following the deal. https://t.co/VHC5mKta3I
— Lisa Abramowicz (@lisaabramowicz1) April 25, 2023
UBS faces a significant task as it completes a first-of-its-kind merger of two global banks with combined assets of around $1.7 trillion due to the precarious situation of its business. According to UBS chairman Colm Kelleher, who has spoken of “huge” dangers in the combination of the institutions, it will take three to four years to fully integrate the operations.
Sergio Ermotti, formerly the CEO of UBS, has been rehired to handle the challenging job. In order to align the institution with a more cautious risk culture, Ermotti will need to eliminate thousands of people and significantly reduce the size of Credit Suisse’s investment bank. Earlier this month, Kelleher told reporters that UBS would put all Credit Suisse staff through a “culture filter” in order to prevent “importing a bad culture.”