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During the first-quarter crisis, outflows from Credit Suisse totaled $69 billion.

Updated: Apr 25, 2023

Clients left the struggling bank, leaving Credit Suisse with asset outflows of SFr61.2bn ($68.6bn), revealing the size of the problem UBS now faces after acquiring its Swiss rival.

During the first-quarter crisis, outflows from Credit Suisse totaled $69 billion.

The main factor that prompted Swiss authorities to intervene last month and arrange a rescue sale to UBS was the speed with which customers abandoned Credit Suisse.

"These outflows, which were most acute in the days immediately preceding and following the announcement of the merger, stabilised to much lower levels, but had not yet reversed as of April 24, 2023," Credit Suisse reported in its first-quarter results posted on Monday.

In the first three months of the year, the bank's main wealth management division lost 9% of its assets. According to Credit Suisse, the decreased assets and fees the bank might earn from them would "likely lead to a substantial loss in wealth management in Q2 2023."

The largest banking transaction since the financial crisis 15 years ago, the $3.25 billion UBS takeover marks the first time two globally major financial institutions have been joined together.

Additionally, Credit Suisse announced on Monday that it had canceled its $175 million purchase of M Klein & Co, the consultancy firm led by former director of the bank Michael Klein. The deal was set up as a component of Credit Suisse's plan to spin off a sizable portion of its investment bank under the First Boston name and have Klein oversee it.

For the first quarter, the bank reported an adjusted SFr1.3bn pre-tax deficit. On a non-adjusted basis, an SFr15bn accounting gain the business realized when bondholders were contentiously wiped out as part of the UBS bailout distorted net income of SFr12.4bn for the quarter.

Holders of additional tier one capital notes, a debt instrument that can convert into equity, that were affected by the ruling have filed a case against Finma, Switzerland's banking regulator. It's anticipated that this will be the first of several claims in the coming years.

The action has momentarily increased Credit Suisse's common stock tier one ratio, a measure of its financial toughness, from 14.1% to 20.3%.

According to Credit Suisse, "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, Credit Suisse would also expect the investment bank and the group to report a substantial loss before taxes in [the second quarter] and 2024."

Separately, UBS confirmed on Monday that Christian Bluhm, its chief risk officer, will remain in the position "for the foreseeable future" to assist with the merger of Credit Suisse rather than stepping down to become a full-time photographer as he had initially announced.


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