ZURICH, SWITZERLAND (AFP) – When Credit Suisse unveils what are likely its final quarterly results today, investors will be seeking clues to the magnitude of the challenges awaiting UBS, after it was strongarmed into taking over its stricken rival.
Credit Suisse pushed forward its result release to come out the day before those of UBS, as Switzerland’s largest bank prepares to swallow its long-time main domestic rival.
The results, which will be presented in a statement without the usual accompanying press conference and analyst discussion, will be closely studied for the mass withdrawals that took place as panic engulfed the bank last month, prior to the hastily arranged takeover.
Absorbing Credit Suisse will be a complex task, and “we won’t have all the answers we need”, Swissquote analyst Ipek Ozkardeskaya told AFP, pointing out that “the merger is fresh and (even) UBS didn’t have enough time to dive in Credit Suisse’s business”. The answers to the many remaining questions around the depth of crises dogging Credit Suisse will arrive “gradually”, the analyst said, adding that she expected UBS over time “to take control of the situation and structure the bank in a healthy way.”
‘VERY WEAK’
Credit Suisse had suffered a string of scandals over several years, and after three United States (US) regional banks collapsed in March unleashing market panic, it was left looking like the weakest link in the chain.
Over the course of a nerve-wracking weekend, Swiss authorities organised an emergency rescue, pressuring UBS to agree to a USD3.25-billion mega merger on the evening of March 19.
Justifying the move to parliament earlier this month, Swiss President Alain Berset said that “without intervention, Credit Suisse would have found itself, in all likelihood, in default on March 20 or 21”.
Today’s quarterly report will likely be Credit Suisse’s last one, depending on how quickly the UBS deal closes, Vontobel analyst Andreas Venditti said in a research note.
He predicted that once released, “the market will focus on the magnitude of outflows across businesses”.
Some numbers are already circulating.
According to data compiled by US financial services firm Morningstar, the bank saw around EUR4.6 billion (USD5.1 billion) withdrawn from funds during the month of March alone, marking the biggest monthly outflow on record.
Venditti said he expected Credit Suisse’s first quarter report to “reveal very weak underlying results”.
He estimated that the bank would post a net loss of around CHF700 million (USD784 million), with an CHF800-million gain from the sale of its Securitised Products Group helping it avoid falling far deeper in the red.
