ZURICH (AFP) – Tens of billions were withdrawn from Credit Suisse in the first three months of 2023, but its profit swelled as the bank’s high-risk debts were wiped out in an emergency takeover by UBS.
Switzerland’s long-time second largest bank saw CHF61.2 billion (USD68.6 billion) withdrawn in the first quarter alone, it said yesterday in what is likely its final quarterly report before it is swallowed by its larger domestic rival, UBS.
Investors had been eagerly awaiting the results as they seek clues to the magnitude of the challenges facing UBS, which was strong-armed last month by Swiss authorities into the mega-merger. Credit Suisse said the “significant net asset outflows” were particularly heavy in the second half of March, as it was engulfed by panic amid the hastily arranged takeover by its larger domestic competitor. “These outflows have moderated but have not yet reversed as of April 24,” the bank said in its earnings statement.
At the same time, the bank said it saw its net profit swell to CHF12.4 billion, up from a significant loss a year earlier, after holders of high-risk Credit Suisse debt were wiped out in the emergency takeover deal.
Swiss authorities required that close to CHF16 billion (USD17.9 billion) in so-called additional tier one (AT1) bonds be rendered worthless before Switzerland’s two biggest banks united.
The order by the Swiss Financial Market Supervisory Authority (FINMA) infuriated bondholders, and a number of them have begun launching legal action against the regulator.
Credit Suisse said its quarterly results were also boosted by the 700-million sale of a significant part of its Securitised Products Group to Apollo Global Management.
But despite this, on an adjusted basis, the bank said it nonetheless suffered a pre-tax loss for the quarter of CHF1.3 billion. The bank, which last October launched a vast restructuring plan including carving out its investment arm, said that branch had suffered an adjusted pre-tax loss of 337 million in the first quarter.
And it warned that “in light of the merger announcement, the adverse revenue impact from the previously disclosed exit from non-core businesses and exposures, restructuring charges and funding costs”, it expected to see a “substantial” pre-tax losses in its investment bank unit and overall in the second quarter and full year of 2023.
Yesterday’s quarterly report could meanwhile be Credit Suisse’s last one, depending on how long it takes to finalise the merger with UBS.
