(Zurich) Credit Suisse on Monday announced further massive withdrawals of funds and a sham quarterly profit, showing the “ urgency ” of the restructuring that awaits UBS after the forced takeover of the bank in turmoil under pressure Swiss authorities.
“UBS undoubtedly faces a major (and urgent) task in the profound restructuring of its former competitor”, reacted to the reading of the figures Andreas Venditti, analyst at Vontobel, in a market note.
During the first quarter, capital outflows reached 61.2 billion Swiss francs (62.5 billion euros), the bank acknowledging in a press release “significant […] outflows during the second half of March”. which “have slowed down, but not yet reversed”.
In a stock market commentary, analysts from the Cantonal Bank of Zurich note outflows “below what was feared”.
In the fourth quarter, Credit Suisse had already suffered 110.5 billion francs in capital outflows. “ During the last six months ”, the bank “ suffered from 140 billion net withdrawals in wealth management alone”, one of its key divisions, noted Mr. Venditti.
These results, finally published on the eve of those of UBS, “reveal the poor state in which the firm finds itself”, he added.
Under pressure from the Swiss authorities, UBS agreed on March 19 to take over Credit Suisse for 3 billion Swiss francs to prevent it from going under.
In the first quarter, the bank posted a sham net profit of 12.4 billion Swiss francs, the result of an accounting effect linked to the takeover by UBS.
To facilitate this takeover, the Swiss market surveillance authority, Finma, reduced to zero the value of the so-called AT1 (Additional Tier 1) risky bonds, put in place in the aftermath of the 2008 financial crisis to strengthen the bank capital.
This decision shocked the holders of this type of bond, which normally comes first in the order of repayment in the event of bankruptcy. Some have recently filed lawsuits against the regulator.
This net profit masks a pre-tax loss of 1.3 billion francs after adjustments, despite a gain of 700 million francs on the sale of part of its securitized products business to Apollo Global Management, details Credit Suisse. .
He still expects a “substantial” loss in the second quarter as well as for the whole of 2023, both at group level and in his investment bank.
In the first quarter, the investment bank suffered a loss of 337 million dollars (306 million euros) in an already difficult context for the sector, but “ exacerbated by the problems ” affecting Credit Suisse, according to the press release.
The Swiss establishment has nevertheless reached an agreement to put an end to a complex and controversial transaction project with the company of American investment banker Michael Klein, “ due to the planned merger ” with UBS.
In a separate statement, UBS announced on Monday that Christian Bluhm, its chief risk officer, will remain in his post longer than planned to support Damian Vogel who is to take on a newly created position as head of risk control for the company. integration of Credit Suisse.
Having “two senior leaders” in risk management will help “ensure that we are well prepared”, said Sergio Ermotti, who took over the management of UBS in early April.
