Credit Suisse has revealed that it experienced net asset outflows of CHF 61.2bn ($68.6bn) during the first quarter of 2023, which resulted in its emergency rescue by domestic rival UBS. The bank’s adjusted pre-tax loss for the quarter came in at CHF 1.3bn. Despite this, it posted a one-off profit of CHF 12.43bn due to the write-off of CHF 15bn of AT1 bonds by the Swiss regulator as part of the acquisition deal.
Significant Net Asset Outflows
Credit Suisse’s earnings report, which could be its last, has revealed that it experienced significant net asset outflows, particularly in the second half of March 2023. The bank also stated that these outflows have moderated but have not yet reversed as of April 24, 2023. First-quarter net outflows totalled 61.2 billion Swiss francs, which is equivalent to 5% of the group’s assets under management as of the end of 2022. The wealth management unit and Swiss bank accounted for 57% of the deposit outflows.
The Acquisition of Credit Suisse by UBS
The acquisition of Credit Suisse by UBS is expected to be completed by the end of this year, but the full absorption of Credit Suisse’s business into UBS Group is expected to take around three to four years. UBS announced that its Group Chief Risk Officer Christian Bluhm will remain in post due to the planned acquisition of Credit Suisse, delaying a planned May 1 handover to Damien Vogel, who will now take up the newly-created role of group risk control head of integration.
The acquisition deal is facing legal and logistical challenges, particularly surrounding the write-off of $17bn of Credit Suisse AT1 bonds. Swiss regulator FINMA is facing a lawsuit from bondholders over the decision to write the AT1s down to zero, while stock investors will receive payouts as part of the takeover. At its annual general meeting last month, Chairman Axel Lehmann and CEO Ulrich Koerner apologised to shareholders and staff. Both took their posts within the last two years and inherited a bank reeling from a series of high-profile scandals, risk management failures, and heavy losses.
Credit Suisse is hoping for a successful turnaround following the acquisition by UBS.
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