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Credit Suisse announced in February that it would report higher losses in the first quarter as well. However, in the process of integrating into UBS, the real question is what assets CS will bring to the new, single major Swiss bank. At the end of 2022, Credit Suisse still had CHF 1.29 trillion in assets under management – client assets at UBS amounted to $3.96 trillion at year-end.
Monday will focus on information from Credit Suisse on the events of mid-March. At the time, there was a huge wave of money outflows, concurrent with a fresh drop in the CS share price, which led to an urgent takeover of UBS on the orders of the authorities just days later.
“I didn’t think about Monday”
It was the comments of the Chairman of the Saudi National Bank, Credit Suisse’s largest shareholder, that triggered the bank rush in mid-March. He had denied the media the possibility of another cash injection for CS. In the context of the US banking crisis and recession fears, the revelations, which in themselves were not surprising, sparked panicked actions among investors and bank customers.
According to observers, more than 10 billion francs were probably withdrawn every day in the days before the takeover announcement. According to Saudi investors, the Swiss National Bank (SNB) announced that it provided liquidity support to CS, after which CS also pulled out a $50 billion SNB loan.
With the announcement of the takeover on Sunday evening, March 19, SNB and the Confederation subsequently provided the combined bank with a liquidity support loan totaling CHF 200 billion. In later interviews, Finance Minister Karin Keller-Sutter explained that Credit Suisse “would not have survived Monday” had it not been announced by UBS.
85 billion francs cut
For CS, this was the second “bank rush” in months: in October 2022, a total of CHF 85 billion of funds was withdrawn in just a few days, and CHF 110 billion was withdrawn throughout the fourth quarter of 2022. The trigger at the time was a few concrete rumors on social media about the bank’s difficulties.
Regarding the financial results for the first quarter, experts expect a loss of 700 million to 1 billion francs – this will be the sixth quarterly loss in a row. The sick big bank’s earnings may have come under strong pressure again from falling customer confidence and ongoing restructuring.
Analysts at British Barclays expect the big bank’s earnings to fall more than 60 percent from the same quarter last year, while costs are also expected to fall by about a third. Experts at Bank Vontobel agree that the drop in earnings in the first quarter likely affected all of the bank’s business units. After the takeover announcement, all new business is likely to have “crashed”.
Customer concerns settled
After all, the big bank can also expect a special income from the sale of parts of the investment bank. Especially with securitized products (SPG), there is still a contribution to the pre-tax profit of approximately $800 million from the sale of the business to Apollo Capital Management of the USA.
The development after the takeover announcement will also be of interest: it probably calmed CS customers’ concerns about their savings in some way. But now you have to decide whether you want to stay in future UBS or switch to another bank if necessary. This is especially true for individual customers and many corporate customers who, due to diversification, have accounts in both major banks.
However, Credit Suisse does not want to make any statements to the media or investors other than the release of the quarterly report on Monday. For further answers, observers should now hope for UBS: It will give its own quarterly figures a day after CS. (pbe/SDA)
Source :Blick
I’m Tim David and I work as an author for 24 Instant News, covering the Market section. With a Bachelor’s Degree in Journalism, my mission is to provide accurate, timely and insightful news coverage that helps our readers stay informed about the latest trends in the market. My writing style is focused on making complex economic topics easy to understand for everyone.
