Credit Suisse has forecast a pre-tax loss of up to 1.5 billion Swiss francs ($1.6 billion) in the fourth quarter, with the Swiss bank reporting that wealthy clients have withdrawn up to 10% of their assets since the start october.
In its fourth earnings warning since January, the bank said the scale of customer outflows – which followed social media rumors about its financial health – had led the bank to dip into cash reserves at of the group and the legal entity. Credit Suisse said it had “fallen below certain regulatory requirements at the legal entity level”.
“Credit Suisse began to experience deposit and net asset outflows in the first two weeks of October 2022 at levels that significantly exceeded rates incurred in the third quarter of 2022,” the bank said in a statement. communicated.
The wealth management division suffered outflows equivalent to 10% of assets under management at the end of the third quarter, or about 63.5 billion francs, he added.
Across the group, the bank bled about 84 billion Swiss francs ($89 billion) in assets as clients in wealth management, asset management and retail banking transferred their cash, investments and deposits to competitors.
JPMorgan analyst Kian Abouhossein warned that “Credit Suisse is not off the hook yet in terms of stabilizing the franchise”.
“Wealth management outflows at 10% of assets under management in the fourth quarter (through November 11) are very large at a level seen by UBS in the global financial crisis on an annualized basis and not on a quarterly basis. .”
The bank’s shares fell 6% in trading on Wednesday to 3.62 Swiss francs, its lowest price in at least 30 years, after falling 60% this year.
More than 90% of Credit Suisse shareholders voted in favor of the bank raising 4 billion Swiss francs from investors, including the Saudi National Bank, to help pay for a sweeping restructuring of the group at a meeting shareholders’ meeting on Wednesday morning.
“This vote marks an important step in building our new Credit Suisse,” said Chairman Axel Lehmann.
The Swiss bank said earlier on Wednesday that its wealth management division was likely to post a loss after net interest income was hit by lower deposits and fees.
He also expects the investment bank to make a sizable pre-tax loss after what it described as a “substantial downturn in capital markets industry-wide”.
“Massive net outflows in wealth management – Credit Suisse’s core business alongside the Swiss bank – are deeply concerning, especially as they have not yet reversed,” said analyst Andreas Venditti. at Vontobel.
“The resulting significant decline in assets under management will reduce our long-term revenue and earnings estimates. Credit Suisse needs to restore confidence as quickly as possible, but that is easier said than done,” he added.
The bank also confirmed its capital ratio guidance published last month, targeting a Tier 1 Tier 1 capital ratio – a reflection of financial resilience – of more than 13.5% by 2025 and at least 13% from 2023 to 2025.
However, he revealed that his liquidity capital ratio – which indicates his ability to withstand short-term stress – had fallen from 192% at the end of September to a daily average of 140% since. Regulators require the bank to stay above 100%.
Last month, the bank announced its restructuring plan, including splitting and splitting its investment bank, cutting thousands of jobs and raising $4 billion in capital, to help it weather the storm. scandals and a loss of 4 billion Swiss francs in the third quarter.
He expected to record a loss of SFr75mn on the sale of his stake in Allfunds Group, the bank added.
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. Credit Switzerland predicts a loss billion dollars then wealthy customers withdraw from funds