Budapest Post

Cum Deo pro Patria et Libertate
Budapest, Europe and world news

Over $68 Billion Withdrawn From Credit Suisse Before UBS Takeover

Over $68 Billion Withdrawn From Credit Suisse Before UBS Takeover

The bank also reported deceptively bloated net profits for the quarter, after its high-risk debts were wiped out in the mega-merger deal, but warned of "substantial" losses to come.
Tens of billions were withdrawn from Credit Suisse in the first three months of 2023, the bank's earnings report showed Monday, providing clues to the towering challenges ahead as UBS prepares an emergency takeover.

Switzerland's long-time second largest bank saw 61.2 billion Swiss francs ($68.6 billion) withdrawn in the first quarter alone, it said Monday in what is likely its final quarterly report before it is swallowed by its larger domestic rival, UBS.

The bank also reported deceptively bloated net profits for the quarter, after its high-risk debts were wiped out in the mega-merger deal, but warned of "substantial" losses to come.

Investors had been eagerly awaiting the results as they seek clues to the magnitude of the challenges facing UBS, Switzerland's largest bank, after it was strongarmed last month by Swiss authorities into the shotgun marriage.

The results seemed to be greeted with some optimism.

In early afternoon trading, Credit Suisse's shares rose nearly two percent to 0.81 Swiss francs a piece and UBS's were up 1.6 percent at 18.35 francs a share, as the Swiss stock exchange's main SMI index rose 0.14 percent.

'Bad shape'

But Vontobel analyst Andreas Venditti warned in a research note that Credit Suisse's report "reveals the bad shape the firm is in".

"UBS undoubtedly faces a major (and urgent) task in deeply restructuring its former competitor."

Credit Suisse said the "significant net asset outflows" were particularly heavy in the second half of March, as it was engulfed by panic in the days surrounding the hastily arranged takeover.

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

Analysts with the Zurich Cantonal Bank (ZKB) stressed that Credit Suisse's outflows for the quarter were "less than feared".

But they come after the bank already saw 110.5 billion francs in outflows in the fourth quarter of 2022.

Mr Venditti pointed out that over the past six months, Credit Suisse's wealth management division alone had seen 140 billion francs in net new money outflows.

The bank meanwhile said it saw its net profit swell in the first quarter to 12.4 billion francs, up from a significant loss a year earlier.

Debt wipe out

But that was largely attributed to holders of high-risk Credit Suisse debt being wiped out in the emergency takeover deal.

Swiss authorities required that close to 16 billion Swiss francs ($17.9 billion) in so-called additional tier 1 (AT1) bonds be rendered worthless before Switzerland's two biggest banks united.

The order by the Swiss Financial Market Supervisory Authority (FINMA) infuriated bondholders, and a number of them have begun launching legal action against the regulator.

Credit Suisse said its quarterly results were also boosted by the 700-million-Swiss-franc sale of a significant part of its Securitized Products Group to Apollo Global Management.

But despite this, on an adjusted basis, the bank said it nonetheless suffered a pre-tax loss for the quarter of 1.3 billion Swiss francs.

The bank, which last October launched a vast restructuring plan including carving out its investment arm, said that unit had suffered an adjusted pre-tax loss of 337 million in the first quarter.

'Substantial' losses

And it warned that "in light of the merger announcement, the adverse revenue impact from the previously disclosed exit from non-core businesses and exposures, restructuring charges and funding costs", it expected to see a "substantial" pre-tax losses in its investment bank unit and overall in the second quarter and full year of 2023.

Credit Suisse also said Monday that it had scrapped a deal to acquire the investment advisory business of M. Klein & Company and fold it into the First Boston brand, which it had planned to resurrect as part of its investment bank overhaul.

The bank said the sides had "mutually agreed to terminate" the $175-million acquisition "considering Credit Suisse's recently announced merger with UBS."

Credit Suisse suffered a string of scandals over the past several years, and after the collapse of three US regional banks unleashed 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 March 19.

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

UBS is due to publish its first quarter results on Tuesday.
AI Disclaimer: An advanced artificial intelligence (AI) system generated the content of this page on its own. This innovative technology conducts extensive research from a variety of reliable sources, performs rigorous fact-checking and verification, cleans up and balances biased or manipulated content, and presents a minimal factual summary that is just enough yet essential for you to function as an informed and educated citizen. Please keep in mind, however, that this system is an evolving technology, and as a result, the article may contain accidental inaccuracies or errors. We urge you to help us improve our site by reporting any inaccuracies you find using the "Contact Us" link at the bottom of this page. Your helpful feedback helps us improve our system and deliver more precise content. When you find an article of interest here, please look for the full and extensive coverage of this topic in traditional news sources, as they are written by professional journalists that we try to support, not replace. We appreciate your understanding and assistance.
Newsletter

Related Articles

0:00
0:00
Close
Bruce Willis Relocated Due to Advanced Dementia
French and Korean Nuclear Majors Clash As EU Launches Foreign Subsidy Probe
EU Stands Firm on Digital Rules as Trump Warns of Retaliation
Getting Ready for the 3rd Time in Its History, Germany Approves Voluntary Military Service for Teenagers
Denmark Confronts U.S. Diplomat Over Covert Trump-Linked Influence in Greenland
Trump Demands RICO Charges Against George Soros and Son for Funding Violent Protests
Taylor Swift Announces Engagement to NFL Star Travis Kelce
France May Need IMF Bailout, Warns Finance Minister
After the Shock of Defeat, Iranians Yearn for Change
Ukraine Finally Allows Young Men Aged Eighteen to Twenty-Two to Leave the Country
The Porn Remains, Privacy Disappears: How Britain Broke the Internet in Ten Days
YouTube Altered Content by Artificial Intelligence – Without Permission
Ukrainian Refugee Iryna Zarutska Fled War To US, Stabbed To Death
Elon Musk Sues Apple and OpenAI Over Alleged App Store Monopoly
German Chancellor Friedrich Merz: “The Current Welfare State Can No Longer Be Financed”
HSBC Switzerland Ends Relationships with Over 1,000 Clients from Saudi Arabia, Lebanon, Qatar, and Egypt
Sharia Law Made Legally Binding in Austria Despite Warnings Over 'Incompatible' Values
Dutch Foreign Minister Resigns Amid Deadlock Over Israel Sanctions
Trump and Allies Send Messages of Support to Ukraine on Independence Day Amid Ongoing Conflict
China Reels as Telegram Chat Group Shares Hidden-Camera Footage of Women and Children
MotoGP Cameraman Narrowly Avoids Pedro Acosta Crash at Hungarian Grand Prix
Wizz Air passengers screamed as storm-battered flight diverts to Bologna
European postal services halt U.S. deliveries after Trump imposes new tariffs
Urban explorer finds abandoned luxury restaurant left to decay
Fidesz leader labels Péter Magyar a ‘bluffer’ amid escalating political spat
French rope park operator arrested for denying entry to Israeli children
Újpest thrashes Zalaegerszeg 4-1 to secure first win in five matches
Profit-margin cap costs retailers 13 billion forints a month, warns trade group
Curiosity rover finds coral-like rock on Mars hinting at watery past
U.S. green policy rollback drives investors to Europe’s sustainable finance market
Special funerals rise in Hungary: boat, aerial and forest burials gain popularity
Hungary’s Kiskunság region turning into semi-desert after extreme drought
Kopasz Bálint wins world kayak 1000 m title in Milan, making him triple world champion
Budapest’s Keleti railway station to close for four weeks for track overhaul
Balaton could be unfit for swimming by 2035 and dry by 2050, scientists warn
Leaked guidelines show Meta’s AI allowed flirty and racist interactions with children
Filming of ‘Emily in Paris’ halted after assistant director dies on set
Filipino guest workers sue after Hungary moves to deport them for pregnancy
Ukraine Declares De Facto War on Hungary and Slovakia with Terror Drone Strikes on Their Gas Lifeline
A monster hit and a billion-dollar toy empire
Animated K-pop Musical ‘KPop Demon Hunters’ Becomes Netflix’s Most-Watched Original Animated Film
Canada: Nurse Suspended and Fined 93 Thousand Dollars After Stating the World’s Most Well-Known Fact Since the Creation of Adam and Eve, That There Are Only Two Genders
Elon Musk tweeted, “Europe is dying”
Far-Right Activist Convicted of Incitement Changes Gender and Demands: "Send Me to a Women’s Prison" | The Storm in Germany
Hungary Criticizes Ukraine: "Violating Our Sovereignty"
Will this be the first country to return to negative interest rates?
U.S. Treasury Secretary Whitney Bessent Backs Stablecoins to Boost Treasury Demand
Spain to Declare Disaster Zones After Massive Wildfires
Three-Minute Battery Swap Touted as Future of EVs
Beijing Military Parade to Showcase Weapons Advances
×