Affected by a serious crisis that led to its sale to UBS, the Swiss bank Credit Suisse today reported asset losses of 61.2 billion francs in the first quarter of 2023, mainly caused by deposit withdrawals, especially on days when the merger was agreed.
In its quarterly report, possibly the last issued by the 167-year-old entity before being absorbed by UBS, the Zurich bank noted that 57% of this net outflow of assets corresponded to the withdrawal of deposits both in conventional banking and in wealth management business.
Credit Suisse had already registered in 2022, especially in the last months of that year, a liquidity outflow of 123.2 billion francs (125 billion euros), which contributed to a huge crisis of confidence that would later lead to the sale. to UBS.
The bank said today that as a result of these asset outflows, it suffered a massive reduction in deposits of 67 billion francs (68.3 billion euros) in the first quarter.
The sale accelerated withdrawals
The bank admitted that the reduction in liquidity “was especially acute in the days immediately before and after the merger announcement” (with UBS), agreed at the request of the Swiss Government on March 19.
The significant deposit withdrawals “stabilized at much lower levels, but as of today the situation has not yet reversed”, acknowledged the entity.
Credit Suisse He recalled that due to the bank’s enormous outflow of assets, which reached around 10 billion francs at the worst moments of the crisis, it had to obtain credit from the Swiss National Bank (BNS, issuer).
As of March 31, according to the bank, this credit amounts to 108,000 million francs (110,200 million euros).
He also stressed that 70 billion francs (71.4 billion euros) have already been returned, of which 60 billion francs were paid in the first quarter and another 10 billion in the current month of April.
low value benefits
All in all, the bank today reported net profits of 12.432 million Swiss francs (12.600 million euros) in the first quarter, although these profits are mainly explained by the reduction to zero of its AT1 obligations, ordered by the Swiss authorities precisely to facilitate your purchase UBS.
Excluding certain extraordinary operations, the bank posted an adjusted loss of 1.316 million francs (1.340 million euros) in the first quarter.
The liquidation of the AT1 bonds has led numerous bondholders to file complaints against the Swiss authorities for the losses suffered, or to announce their intention to do so, both inside and outside the Swiss country.
Another extraordinary income linked to the strong reported profit, according to the report, was the sale of a significant part of the securitized products of Credit Suisse to the New York firm Apolloas part of the restructuring process that the entity attempted to get out of its crisis.
In 2022, Credit Suisse had reported losses of 7.293 million Swiss francs (7.400 million euros).
Credit Suisse detailed that in the quarter it obtained income of 18,467 million Swiss francs (18,800 million euros), four times more than in the same period of 2022, compared to operating expenses of only 5,620 million Swiss francs (5,300 million euro).
The entity’s total assets, according to the report, were reduced in the January-March period to 540,291 million francs (551,000 million euros), 27% less than a year ago.
towards the merger
Credit Suisse indicated in its report that it continues to work with UBS to ensure that the merger “be completed on time”, although he stressed that this is subject to certain business closing operations that, according to both entities previously indicated, could take months.
On March 19, UBS acquired Credit Suisse at the behest of the Swiss government for 3 billion francs (3.05 billion euros) to save it from bankruptcy.
The losses that the entity accumulated, together with numerous image scandals and a drop in investor confidence in the stock market after the fall of Silicon Valley Bank and Signature Bank in the United States, led the second largest bank in Switzerland to a serious crisis that the Government of the country tried to quell with the help of UBS.
The results of Credit Suisse They were published three days earlier than initially planned in order to come to light before those of their rival and buyer, UBSscheduled for tomorrow Tuesday.
Source: EFE
Source: Gestion
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