During The First Quarter, Credit Suisse Lost $68 Billion In Assets

There was an announcement on Monday from Credit Suisse, revealing that, during the first-quarter collapse that culminated in the rescue of the Swiss bank by rival UBS, it suffered a net asset outflow of 61.2 billion Swiss francs ($68.6 billion).

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In the first quarter of 2023, the stricken Swiss lender posted a one-time profit of 12.43 billion Swiss francs of one-time losses of 15 billion Swiss francs that were attributable to the controversial write-off by the Swiss regulator of 15 billion Swiss francs in AT1 bonds that were part of the deal. A pre-tax loss of 1.3 billion Swiss francs was recorded for the quarter adjusted for tax.

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As a result of the fall of Silicon Valley Bank, which caused fears of a global banking crisis that was in part triggered by the collapse of Credit Suisse's shares and deposits at the end of March, Swiss officials brokered the controversial 3 billion Swiss franc rescue during a weekend of late March.

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There are significant net asset outflows that Credit Suisse experienced in the second half of the year 2023, in particular in the second half of March 2023, which have moderated as of April 24, 2023, but have not yet reversed. This was described in Monday's earnings report, which could be the last in the bank's 167-year history.

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As of the end of 2022, the group had assets under management of 61.2 billion and net outflows of 61.2 billion. Credit Suisse's wealth management unit and Swiss bank showed a 56 percent decrease in net asset outflows for the quarter as a result of deposit outflows.

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A substantial amount of cash deposits and maturing time deposits were withdrawn by Credit Suisse in the second half of March 2023. A decline of CHF 67 billion in deposits by customers was reported by the bank in the first quarter of 23.

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As of April 24, 2023, these outflows had stabilized to much lower levels and had not yet reversed after the announcement of the merger.

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Ideally, the acquisition will be completed before the end of this year, but it will likely take three to four years for Credit Suisse's business to be fully absorbed by UBS Group.

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Because of the planned acquisition of Credit Suisse, UBS' Group Chief Risk Officer Christian Bluhm will remain in post, delaying the planned handover to Damien Vogel on May 1, who will now hold the newly created position of head of integration for group risk control.

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Credit Suisse AT1 bonds worth $17 billion are at risk of being wiped out by the deal, which remains mired in legal and logistical challenges. Investors in the AT1s - widely regarded as relatively risky investments - are suing FINMA over the decision to write them down to zero, while stock investors will receive payouts.

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CEO Ulrich Koerner and chairman Axel Lehmann apologized to shareholders and staff at last month's annual general meeting. They inherited banks reeling from high-profile scandals, poor risk management, and heavy losses when they took on their posts with less than two years of experience.

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Despite Lehmann and Koerner's massive strategic overhaul aimed at bolstering its risk and compliance functions and addressing perennial underperformance in the investment bank, Credit Suisse posted a net loss of 7.3 billion Swiss francs in 2022, including 1.4 billion in the fourth quarter.

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Credit Suisse experienced net outflows of 111 billion Swiss francs in the final quarter of 2022, according to Morningstar Equity Analyst Johann Scholtz.

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A note on Monday noted that wealth management clients withdrew 9% of their cash, while Swiss bank customers withdrew 1%, and asset management customers withdrew 3%. Customer deposits dropped by 29% during the quarter, Scholtz told investors.

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It was not clear how much damage was caused to the Credit Suisse franchise during the banks' first quarter turmoil, he said.

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Wealth management deposits accounted for most of the client outflows, however, UBS is pleased that its higher-margin assets invested on behalf of its clients performed reasonably well.

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According to Credit Suisse, although outflows from Swiss banks and asset management businesses have slowed, they have not reversed."

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