Customers withdrew large amounts of money and deposits from the failed major Swiss bank Credit Suisse in the first quarter of 2023. After losing billions in 2022, the financial institution is also expecting red numbers in the current quarter and for the year as a whole, as announced in Zurich. The stock market nevertheless reacted with a slight price increase, even if the paper remained at a low level of CHF 0.80 (EUR 0.82).
It should be the last quarterly result of the historic bank. Credit Suisse (CS) got into trouble after scandals, massive losses and the withdrawal of customer deposits. In view of nervous financial markets and fears of a global banking crisis, the government had arranged a takeover by competitor UBS on March 19. They used emergency law to do this and alienated shareholders, who suffered huge losses. Many have announced lawsuits.
According to the bank, customer deposits at CS fell by CHF 67 billion (EUR 68.4 billion) in the first quarter. The deductions have decreased, but a trend reversal has not yet occurred as of Monday. In order to be able to pay customers their money, CS has already had to take out CHF 108 billion in loans from the National Bank (SNB). The SNB promised CHF 200 billion, half of which was guaranteed by the Swiss government.
What’s next for Credit Suisse?
It is speculated that UBS will continue the Swiss business of CS as an independent bank or that it will go public. “But the question is: Where does the credibility for the new Credit Suisse come from?” said Stefan Legge, lecturer in economics at the University of St. Gallen. It should not be said that customers will stick with her after the series of scandals and the emergency rescue. In the first quarter, CS managed CHF 1.2 trillion in assets (assets under management), almost 20 percent less than a year earlier.
Legge does not believe that speculation that CS’s Swiss business could bring in CHF 15 billion on the stock exchange is unreasonable. That might be a chance for German banks to get a foothold in the Swiss market, he said. It would be huge business for UBS: it pays only three billion francs for the entire CS, with wealth management, asset management and investment bank. However, it was not yet possible to foresee what kind of write-downs would be necessary.
At CS, the planned spin-off of the capital markets and consulting business – the support of companies in takeovers and mergers or IPOs – under the name CS First Boston is off the table. The management should take over the former CS board member Michael Klein. The bank wanted M. Klein’s investment banking firm Klein Group as part of the deal