Credit Suisse Says it Lost $68B in Assets Last Quarter

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Facts

  • Credit Suisse said Monday it lost 61B Swiss francs (US$68B) in assets during the first quarter of this year, with customer deposits also declining by 67B Swiss francs during the same period.1
  • The bank's wealth management division saw its assets under management drop to 502.5B Swiss francs, down from 707B Swiss francs reported for the same time a year prior. The collapses of Signature Bank and Silicon Valley Bank also played a role as investors began making panic withdrawals.2
  • This could be Credit Suisse's last report as rival UBS is expected to buy out the 167-year-old bank for 3B Swiss francs in stock and assume up to 5B Swiss francs in losses.3
  • As the bank said the "significant net asset outflows" were particularly heavy in the second half of March, Swiss authorities organized an emergency rescue, pressuring UBS to agree to the merger on March 19.4
  • Credit Suisse has also mutually agreed to terminate its planned $175M acquisition of Michael Klein’s investment banking business. UBS says it plans on scaling back its investment business after the acquisition.3
  • Credit Suisse, however, did report a pre-tax profit of 12.8B Swiss francs, largely due to the controversial write-down to zero of AT1 bonds and gains from selling a big portion of its Securitized Products Group to Apollo Global Management. UBS says it expects the deal to bring $8B in cost reductions by 2027.1

Sources: 1Reuters, 2Business Today, 3Al Arabiya English, and 4INQUIRER.net.

Narratives

  • Narrative A, as provided by WRAL TechWire. As shown by its rapid-fire asset sales, Credit Suisse is finally dying out and is in need of a stronger business to take over. While UBS can take on this role, the next few years of integrating the two banks need to be taken with caution. UBS needs to rid the company of Credit Suisse's outdated risky business tactics and prioritize wise banking management.
  • Narrative B, as provided Tax Research UK. With a bank such as Credit Suisse to be bailed out in a manner horribly reminiscent of 2008, it's time for a radical rethinking of central bank policy. Such crises are the product of the central banks' policies and failure to supervise. Bankers cannot continue to attempt to serve both society and themselves — they must make the right decision or these poorly regulated markets are at risk of falling off a cliff.

Predictions