New CS numbers are a warning sign for UBS

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Credit Suisse’s skeleton figures for the first quarter of 2023 are pretty weak, and the bank doesn’t have much to report. Now UBS is on the alert. He’d better hurry.

Mercifully, there are a few positives to note: CS is even posting a net profit. However, this is not due to their own performance, but to the fact that the supervisor Finma declared the AT1 bonds worthless with the stroke of a pencil. These billions are nothing more than a pillow for the new UBS.

CS keeps bleeding

Megabank needs it, because without this special effect, CS will continue to be in jeopardy, promising further quarterly losses. While cash outflows are not as high as last quarter, they are still very high. CS keeps bleeding, customer distrust is still great.

Therefore, CS is dependent on the trickle of the Central Bank and has requested liquidity assistance of up to CHF 170 billion in recent weeks. About 100 billion of these have not yet been repaid. Without the takeover by UBS, ordered by the state on March 19, the bank would have gone bankrupt.

Asset management risk factor

All this should also start to worry UBS, the world’s largest wealth manager, and the entire financial center. Because the crisis of confidence in CS shows that not only investment banking, which is known for its notorious risk taking, but also so-called crisis-proof asset management can be a source of danger.

This is evident on both a large and a small scale: not only in Switzerland, many CS customers have their money in a safe place. Globally, the rich are turning their backs on the bank. Tired of Swiss Banking under the “Credit Suisse” brand. Along with them go good client advisors, who will be missing in the future to attract fresh money.

More than a month has passed since the purchase announcement. It may take another two months for the deal to be legally completed and for UBS to have full access to CS’ books.

UBS needs to create clarity

Now every day matters. The sooner UBS takes over CS, the better. It is the only way for customers to regain their trust and for UBS to eventually liquidate Credit Suisse. In addition, employees of both banks need clarity quickly: fear of losing their jobs is common, not only in CS, but also in UBS. Frightened employees are rarely productive. Everyone needs to go the extra mile right now for integration to be a success story.

Therefore, UBS boss Sergio Ermotti (62) should make important statements on the future of CS on Tuesday. Thus, there is some meat on the bone in the whole deal, not just the skeleton of an old big bank. Even strong and healthy UBS would be hard to digest.

Source :Blick