Credit Suisse, the collapsed banking giant, has disclosed that 61.2 billion Swiss francs (£55.2bn; $68.6bn) left the bank in the first quarter of this year, providing insight into the magnitude of the bank run that triggered its state-supported rescue.
As the bank published what is expected to be its final financial results, its flagship wealth management division reported a drop in assets under management to 502.5 billion francs by the end of March, a decrease of almost 29% from the same period last year, according to a statement by Credit Suisse.
The outflows have eased but not yet reversed as of April 24, 2023. Credit Suisse clients began withdrawing funds after the bank was hit by market turmoil following the collapses of US banks Silicon Valley Bank and Signature Bank in March.
Swiss authorities orchestrated a rescue package for Credit Suisse, which included over 200 billion francs in financial guarantees and the takeover of Credit Suisse by rival Swiss bank UBS.
Credit Suisse had incurred losses and confronted a series of difficulties in recent years, such as money laundering allegations, and recorded a loss of 7.3 billion Swiss francs in 2022, its worst year since the financial crisis of 2008, and warned it did not anticipate being profitable until 2024.
During the BBC’s Today program, independent banking analyst Frances Coppola commented on the latest results, revealing that Credit Suisse had already experienced billions of outflows in the last three months of 2022, which were then compounded by this quarter’s withdrawals. Coppola stated that banks, regardless of their size, do not survive such outflows.
Shanti Kelemen, CIO at M&G Wealth Investments, noted that the outflows were “going to be a big number,” given the bank’s size. Kelemen added that the current results confirm what UBS has purchased.
The collapses of US banks Silicon Valley Bank and Signature Bank in 2022 came after the value of their assets dropped significantly due to rising interest rates, causing banking shares worldwide to fall sharply and raising concerns about other lenders facing similar issues.
While investor concerns have since subsided, Coppola warned of possible banking turbulence, stating that she does not know whether it will affect larger banks like Credit Suisse.