More than $68 billion withdrawn from Credit Suisse ahead of UBS takeover

Zurich, Switzerland: In the first three months of 2023, more than $68 billion had been taken out of Credit Suisse, the bank reported on Monday. These are likely its last quarterly reports before being absorbed by competitor UBS.

61.2 billion Swiss francs ($68.6 billion) were taken out of Switzerland’s longtime second-largest bank in only the first three months.

The bank’s net profit increased to 12.8 billion francs in the same period from a large loss a year earlier, mostly as a result of the emergency takeover agreement wiping away its high-risk borrowers.

Investors had been anxiously expecting the findings as they look for hints as to the scope of the difficulties UBS is suffering after being coerced last month into the mammoth merger by Swiss regulators.

Credit Suisse said the “significant net asset outflows” were particularly heavy in the second half of March, as it was engulfed by panic prior to the hastily arranged takeover by its larger domestic competitor.

“These outflows have moderated but have not yet reversed as of April 24, 2023,” the bank said in its earnings statement.

The outflow numbers did not come as a complete surprise, however.

US financial services firm Morningstar said last week that data it had compiled suggested the bank saw around 4.6 billion euros ($5.1 billion) withdrawn from funds during March alone, marking the biggest monthly outflow on record.

Credit Suisse had suffered a string of scandals over several years, and after three US regional banks collapsed in March unleashing market panic, it was left looking like the weakest link in the chain.

Over the course of a nerve-wracking weekend, Swiss authorities organised an emergency rescue, pressuring UBS to agree to a $3.25-billion mega-merger on the evening of 19 March.

UBS chiefs told shareholders that the Swiss bank’s emergency takeover of beleaguered rival Credit Suisse was a “Herculean task” strewn with risks — but still the right decision.

Shareholders of both banks had no say in the mega-merger, which was engineered by the Swiss government, the central bank and the financial regulators FINMA.

UBS chairman Colm Kelleher told the bank’s annual general meeting in Basel that although the $3.25-billion takeover was sprung upon them, it would offer overall stability.

“Whilst we did not initiate these discussions, we believe that this transaction is financially attractive for UBS shareholders. I am convinced we made the right choice,” he insisted.

“Stabilising the situation required urgent action, leaving no time to consult shareholders.

“I understand that not all stakeholders of UBS and Credit Suisse are pleased with this approach.”

UBS will become a banking colossus, with $5 trillion of invested assets.

Justifying the move to parliament earlier this month, Swiss President Alain Berset said that “without intervention, Credit Suisse would have found itself, in all likelihood, in default on March 20 or 21”.

In 2022, Credit Suisse suffered a 7.3-billion-franc loss, with 110.5 billion francs in outflows in the final quarter alone.

That stood in stark contrast to the $7.6 billion profit raked in by UBS last year.

Monday’s quarterly report will likely be Credit Suisse’s last one, depending on how long it takes to finalise the merger with UBS, which will present its results Tuesday.

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