Credit Suisse says it lost $68 billion in assets last quarter, outflows continue

ZURICH, April 24 (Reuters) – Credit Suisse ( CSGN.S ) said on Monday that 61 billion Swiss francs ($68 billion) in assets left the bank in the first quarter and outflows continued, underscoring the challenge facing UBS Group AG ( UBSG.S) to save its rival.

It also said customer deposits fell by 67 billion francs in the quarter and that there had been significant non-renewals of maturing time deposits.

Most of the asset outflow came from the wealth management division and occurred in all regions.

“These outflows have moderated but have not yet reversed as of April 24, 2023,” Credit Suisse said.

Shares in both UBS and Credit Suisse rose slightly in early trade, with some analysts noting that the outflows were not as bad as feared.

But others said the scale was alarming.

Credit Suisse’s ability to generate revenue appeared to be so damaged that “the deal may well remain a drag on UBS’s operating results unless a deeper restructuring plan is announced,” London-based analyst Thomas Hallett at KBW said in a note to clients.

Assets managed by the flagship asset management division fell to 502.5 billion francs at the end of March, compared with 707 billion reported for the same period last year.

The 167-year-old bank reported results for what is likely to be the last time, as its state-engineered marriage with UBS is expected to be completed soon.

Clients quickly began pulling money from scandal-plagued Credit Suisse after it was caught up in market turmoil sparked by the collapse of US lenders Silicon Valley Bank and Signature Bank.

This prompted the Swiss authorities to put together a rescue package that saw UBS agree to take over Credit Suisse for 3 billion Swiss francs in stock and assume up to 5 billion francs in losses. It also included 200 billion francs in government financial guarantees.

Credit Suisse said at the end of the first quarter it had 108 billion Swiss francs in net borrowings under those facilities after repaying 60 billion. Since then, it has paid back another 10 billion.

The bank also said it had agreed to end its planned $175 million acquisition of Michael Klein’s investment banking business, which it intended to spin off with its own investment banking arm.

UBS has said it plans to scale back Credit Suisse’s investment bank.

CREDIT SUISSE’S FUTURE

A gutting of assets also took place in the bank’s Swiss arm, which saw retail customers withdraw 6.9 billion francs as a result of dwindling confidence, raising questions about the future of the Credit Suisse brand.

“The results show the challenged position CS’s franchise is in and the work ahead for UBS taking over CS,” analysts at RBC Capital Markets said in a note to clients.

At UBS’s annual general meeting held this month, the bank’s deputy chairman Lukas Gaehwiler said Credit Suisse will continue to operate under its own name in Switzerland for the foreseeable future.

Amid growing pressure in Switzerland for Credit Suisse’s domestic business to be spun off, Gaehwiler said UBS had not yet decided what it would do and that “all options are on the table”.

UBS has also yet to make any announcements about how many Credit Suisse jobs will be cut, but after the takeover UBS executives said they expected the deal to deliver $8 billion in cost reductions by 2027, $6 billion of which would come from cut the number. of full-time employees across the companies’ operations.

UBS said on Monday that Christian Bluhm – whose departure was previously flagged – will continue as its chief risk officer for the “foreseeable future” to work on the takeover of Credit Suisse.

($1 = 0.8920 Swiss francs)

Reporting by Noele Illien; Editing by Emelia Sithole-Matarise and Edwina Gibbs

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