Tens of billions of dollars were withdrawn from Credit Suisse in the first three months of 2023, according to the latest quarterly results announced by the bank on Monday, most likely before its competitor, UBS, acquired it.
The second one biggest bank in Switzerland recorded a withdrawal of 61.2 billion Swiss francs ($68.6 billion) inside the first region by myself.
On the identical time, the bank’s net profits rose to 12.4 billion francs, after a huge loss final yr, way to the acquisition of credit score Suisse’s excessive-danger debt, as part of the deal with UBS.
Buyers have been waiting for the effects for symptoms of the volume of the challenges dealing with UBS.
Credit Suisse said “notable net asset withdrawals” were particularly large in the second half of March, when panic set in ahead of the hastily made takeover.
He added in his revenue report, “The withdrawals have calmed down, but the movement until April 24, 2023 had not returned to what it was.”
On the same time, the financial institution said its internet earnings rose to twelve.Four billion francs.
As part of the massive merger between the two Swiss banks last month, the Swiss authorities requested that 16 billion Swiss francs ($17.9 billion) of “Additional Tier 1 Capital Bonds” (AT1) be declared worthless.
The selection issued by the Swiss financial market Supervisory Authority (FINMA) angered bondholders, who launched legal complaints in opposition to this regulatory frame.
Expect big losses
Credit Suisse said that its quarterly results were also strengthened by selling part of its securitized financial assets (securitization is based on converting debts into instruments and bonds and putting them on the market to obtain liquidity) to Apollo Global Management.
However, the bank stated it had suffered a pre-tax loss on a quarter of 1.3 billion Swiss francs.
The bank, which released a huge restructuring plan remaining October, along with the establishment of its funding arm, said that the department suffered an adjusted loss before taxes amounting to 337 million within the first sector.
He warned that “in light of the merger announcement and the negative impact on revenues (…) and restructuring fees and financing costs,” it is expected to record “significant” losses in the second quarter and overall throughout the year 2023.
Monday’s quarterly report may be Credit Suisse’s last, depending on how long it takes to complete the merger with UBS.
bad situation
Credit Suisse has been exposed to a number of scandals in recent years, and after the collapse of three local American banks sparked panic in the financial markets, the bank appeared to be the weakest link in the chain.
During a hectic weekend, the Swiss authorities organized an emergency rescue deal and pressured UBS to agree to a major merger worth $3.25 billion on the night of March 19.
In justifying the decision before Parliament earlier this month, Swiss President Alain Berset said, “Had it not been for the intervention, Credit Suisse would have most likely found itself in default on March 20 or 21.”
In 2022, Credit Suisse posted a loss of 7.3 billion francs, with 110.5 billion francs of withdrawals recorded in the last quarter alone.
This represents a stark contrast to the $7.6 billion profit UBS recorded last year.
UBS is expected to publish its first-quarter results on Tuesday.
Analysts at Zurich Kantal Bank acknowledge that UBS’s results will be a “sideshow,” at a time when attention is drawn to “doubts surrounding the planned merger with Credit Suisse.”
Vontobel analyst Andreas Vendetti agrees, warning in a research note that the Credit Suisse report “reveals the poor state of the institution.”
“UBS undoubtedly faces a major (and urgent) task of carrying out a deep restructuring of its former competitor,” he said.
Bank stocks around the world witnessed a sharp decline amid fears that other banks would be exposed to similar problems, and that investors would rush to withdraw their money from Credit Suisse, which is already suffering.
The Swiss authorities opened an investigation into the sudden acquisition of credit Suisse, which was the second one largest financial institution within the united states of america.
The acquisition deal angered financiers and shareholders of both banks, who have been deprived of vote casting on the purchase.
A few argued that this broken Switzerland’s reputation as a international financial centre.
When the deal was announced, Credit Suisse was valued at $3.15 billion, which was valued at $8 billion before the settlemen