ZURICH, April 24 (Reuters) – Credit Suisse (CSGN.S) said on Monday that 61 billion Swiss francs ($68 billion) of assets left the bank in the first quarter and outflows were continuing, underscoring the challenge faced by UBS Group AG. (UBSG.S) in the rescue of its rival.
He also said that customer deposits fell by 67 billion francs in the quarter and that there were significant non-renewals of term deposits coming due.
Most of the asset outflows came from its wealth management division and occurred across all regions.
“These outflows have moderated but have not yet reversed as of April 24, 2023,” Credit Suisse said.
Shares of UBS and Credit Suisse edged higher in early trading, with some analysts noting the outflows were not as severe as expected.
But others said the scale was alarming.
Credit Suisse’s ability to generate revenue appears so compromised that “the deal may well remain a drag on UBS’s operating results unless a more comprehensive restructuring plan is announced,” the analyst said. Londoner Thomas Hallett of KBW in a note to clients.
Assets managed by the flagship wealth management division fell to 502.5 billion francs at the end of March, against 707 billion declared for the same period last year.
The 167-year-old bank has announced results for what is likely to be the last time, as her state-arranged marriage to UBS is expected to close soon.
Customers soon began withdrawing cash from scandal-ridden Credit Suisse after they were caught in market turmoil triggered by the collapse of US lenders Silicon Valley Bank and Signature Bank.
This led the Swiss authorities to prepare a rescue plan which saw UBS agree to take over Credit Suisse for 3 billion Swiss francs in shares and assume up to 5 billion francs in losses. It also included 200 billion francs in financial guarantees from the state.
Credit Suisse said that at the end of the first quarter, it had 108 billion Swiss francs of net borrowings under these facilities after having repaid 60 billion. Since then, it has repaid another 10 billion.
The bank also said it had mutually agreed to end its planned $175 million acquisition of Michael Klein’s investment banking business, which it intended to spin off with its own arm. of investment banking.
UBS has announced plans to cut investment bank Credit Suisse.
THE FUTURE OF CREDIT SUISSE
An asset gutting has also taken place at the Swiss arm of the bank, which has seen private clients withdraw 6.9 billion francs due to loss of confidence, raising questions about the future of the Credit Suisse brand.
The “results show the difficult position the CS franchise is in and the work that needs to be done for UBS to take over CS,” RBC Capital Markets analysts said in a note to clients.
At UBS’s annual general meeting this month, the bank’s vice chairman, Lukas Gaehwiler, said Credit Suisse would continue to operate under its own name in Switzerland for the foreseeable future. .
Amid mounting pressure in Switzerland to spin off Credit Suisse’s domestic operations, Gaehwiler said UBS had not yet decided what it would do and “all options are on the table.”
UBS has yet to make an announcement on how many Credit Suisse jobs will be cut, but after the takeover UBS executives said they expect the deal to bring in $8 billion. in cost reductions by 2027, of which $6 billion would come from reducing the number. full-time employees in all of the company’s activities.
UBS said on Monday that Christian Bluhm – whose departure was previously reported – will continue as chief risk officer for the “foreseeable future” working on the Credit Suisse takeover.
($1 = 0.8920 Swiss francs)
Reporting by Noele Illien; Editing by Emelia Sithole-Matarise and Edwina Gibbs
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