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TENS OF BILLIONS were withdrawn from Credit Suisse in the first three months of 2023, the bank’s earnings report has shown, providing clues to the towering challenges ahead as UBS prepares an emergency takeover.
Switzerland’s long-time second largest bank saw 61.2 billion Swiss francs ($68.6 billion/€62.5 billion) withdrawn in the first quarter alone, it said today in what is likely its final quarterly report before it is swallowed by its larger domestic rival, UBS.
The bank also reported deceptively bloated net profits for the quarter, after its high-risk debts were wiped out in the mega-merger deal, but warned of “substantial” losses to come.
Investors had been eagerly awaiting the results as they seek clues to the magnitude of the challenges facing UBS, Switzerland’s largest bank, after it was strongarmed last month by Swiss authorities into the shotgun marriage.
Credit Suisse’s report “reveals the bad shape the firm is in”, Vontobel analyst Andreas Venditti said in a research note.
“UBS undoubtedly faces a major (and urgent) task in deeply restructuring its former competitor.”
Credit Suisse said the “significant net asset outflows” were particularly heavy in the second half of March, as it was engulfed by panic in the days surrounding the hastily arranged takeover.
“These outflows have moderated but have not yet reversed as of 24 April 2023,” the bank said in its earnings statement.
Analysts with the Zurich Cantonal Bank (ZKB) stressed that Credit Suisse’s outflows for the quarter were “less than feared”.
But they come after the bank already saw 110.5 billion francs (€112.8 billion) in outflows in the fourth quarter of 2022.
Venditti pointed out that over the past six months, Credit Suisse’s wealth management division alone had seen 140 billion francs (€142.9 billion) in net new money outflows.
The bank meanwhile said it saw its net profit swell in the first quarter to 12.4 billion francs (€12.6 billion), up from a significant loss a year earlier.
But that was largely attributed to holders of high-risk Credit Suisse debt being wiped out in the emergency takeover deal.
Swiss authorities required that close to 16 billion Swiss francs (€16.3 billion) in so-called additional tier 1 (AT1) bonds be rendered worthless before Switzerland’s two biggest banks united.
The order by the Swiss Financial Market Supervisory Authority (FINMA) infuriated bondholders, and a number of them have begun launching legal action against the regulator.
Credit Suisse said its quarterly results were also boosted by the 700-million-Swiss-franc (€714 billion) sale of a significant part of its Securitized Products Group to Apollo Global Management.
But despite this, on an adjusted basis, the bank said it nonetheless suffered a pre-tax loss for the quarter of 1.3 billion Swiss francs.
The bank, which last October launched a vast restructuring plan including carving out its investment arm, said that unit had suffered an adjusted pre-tax loss of 337 million in the first quarter.
And it warned that “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”, it expected to see a “substantial” pre-tax losses in its investment bank unit and overall in the second quarter and full year of 2023.
Credit Suisse also said today that it had scrapped a deal to acquire the investment advisory business of M. Klein & Company and fold it into the First Boston brand, which it had planned to resurrect as part of its investment bank overhaul.
The bank said the sides had “mutually agreed to terminate” the $175-million (€159 million) acquisition “considering Credit Suisse’s recently announced merger with UBS.”
Credit Suisse suffered a string of scandals over the past several years, and after the collapse of three US regional banks unleashed market panic, it was left looking like the weakest link in the chain.
Over the course of a nerve-wracking weekend, Swiss authorities organised an emergency rescue, pressuring UBS to agree to a $3.25-billion (€2.95 billion) mega merger on the evening of 19 March.
Justifying the move to parliament earlier this month, Swiss President Alain Berset said that “without intervention, Credit Suisse would have found itself, in all likelihood, in default on March 20 or 21″.
In 2022, Credit Suisse suffered a 7.3-billion-franc loss, in stark contrast to the $7.6 billion profit raked in by UBS last year.
UBS is due to publish its first quarter results tomorrow.
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More taxpayer funded bailouts for ffg buddies while Delaney walks away with over 400k and we go to jail for non payment tv licence fee to fund Ryan turbidys €1:50 steak dinners in Rte
@Tom o brien: shane ross calls us tollrats but we are always good for his bailouts thecheek of him
@Tom o brien: We have to take resonsibility also. We are the one who vote td to DAIL . On 8 Feb we will have opp to tell them that we want DAIL back in control of that creaking public fund being propped up now by pensions fund and holding loan fund that they say is for MIN TO SPEND FROM SUBJECT TO THE TERMS OF THE DEAL MADE BY LENIHAN WITH EU AND IMF and the min is going to take money out to FAI.
It is TD who made decison giving control to MIN .
We elect TD
Tme pe reall stat telling td cos u wonder about housing ??
@mr lanister: That’s because Soccer is the dominant sport by a mile in Dublin, where the government are trying hard to hold onto the seats they have. It’s no coincidence that this is announced in the last 9 days of the election.
@Marcus Mac An Bhaird: as in match seats! !
My tax money better not be funding this!!
@Lydia McLoughlin: considering governmet funding is restored your taxes are funding this
@Lydia McLoughlin: or………?
It’s not Irish football, why do people keep saying this. It’s Irish soccer
@maurice kavanagh: “Unqualified, the word football normally means the form of football that is the most popular where the word is used”
I’d be fine with this if they’d just throw Delaney in jail
Good news, and the only option open to government.
Irelands most participated in sport deserves multiples of this bailout.
In time this past few months will be seen as the best thing to happen Irish football.
@Eamonn Duggan: This is the only sensible comment I’ve seen on this article.
@Eamonn Duggan: Gaelic is the most participated sport and if a Bailout was agreed the former directors and CEO should have been arrested on fraud offences first
@David Garland: All four Gaelic sports combined are marginally more participated in, but association football is the single sport with the highest participation by a distance
@Eamonn Duggan: a new beginning great news for soccer
@David Glynn: all these development coaches and the sessions they run are funded by both the FAI and LDCs (currently totally funded by LDC). LDCs are government funded. People like you seem to ignore this significant funding and all the grants given to local clubs in you arguments in favour of the rotten FAI. The FAI is hardly reformed when it’s president was on the council for 20 years not holding Delaney and co to account
@John Buckley: A.ll of them gone now. I just disagree with you on future funding. Anyway, its going ahead
@David Glynn: they are not all gone. Most of the council is still there and they are meant to be the ones who hold to the board to account. The president lost to the army place on the council but his buddies got him the football for all place so he would be eligible for the election – that stinks. John Earley finally stepped down from the board last month and his buddies gave him a position on the high-performance committee last week – that stinks. It is still a cesspool and needs a proper clear out.
Looks like Delaney’s pension pot is safe
fGFF our out out
This decision should be left until the next government takes power, just in case it involves Electronic voting
You’d nearly think there was an election around the corner
Absolutely disgraceful behaviour by Ross and the government, bailing out a useless corrupt organization using the pretence of keeping the grassroots organisation alive to promote healthy pastimes.
If they were serious about that the money available would be distributed between the Athletic organisations, GAA and Rugby, because anything given to FAI will be squandered or pushed down back pockets.
@Liam Mernagh: In this case it kind of had to happen, what is done is done with the FAI and unfortunately with the law being the way it is, nobody will have to pay the price for it. However I’m at least a little bit hopeful it can be better run going forward.
@Aidan: I hope you’re right Aidan, but I remain to be convinced, the culture of FAI is such that they don’t understand or care about good governance and that also applies to UEFA and FIFA. Cast your mind back to when Ireland was doing well under Jack & the tickets scandal with Nick the Greek and then Blatter and his governance of FIFA, culture it’s all about culture.
So they stop public funding of 2.9m per year because of all the shenanigans going on and then reverse course and not only restore that but double it to €5.8m and give interest free loans of €2.5m per year for the next 3 years.. call it what you want Mr. Ross but it’s high time you were on your bike!! Crisis after crisis in this country unresolved and you put public funds into a rotten organisation that was basically a little boys club with jobs for the lads and massive pay offs! Can’t wait till I get my day in the election!
Tax payers money being squandered
It’s not Government money
Disgraceful waste of public taxpayer s money.
FG not getting anything from me on 8th February.
This isn’t refinancing this is a government bailout for an organisation that has not even begun to make real changes in how its governed.
Complete joke this has happened but what else do you expect from FG
Bailout….
Tax payers money….
Etc, etc, etc…..
How much money have the government (councils) milked from schoolboy and schoolgirl football since they started charging the kids to play football in public parks?
Give me a break with your whinging…..
And the Election is when?????
The mint is going to be the new FAI HQ
Government making sure of a good few votes on February 8th.
“If it looks like a duck, swims like a duck, and quacks like a duck, then it probably is a duck”
This is extract from B Lenihan statement to Dail on AG advises and well intended.
But when PRSI Fund in pipeline to prop up creaking public fund under terms of deal that Taoisach later also decided did not req dail approval
and
TD did not object on behalf of DAIL accountable to us
AND
coming with mandate that promise are when we get into govt ..
time for people to start telling TD that NOT acceptable at all and that DAIL start flexing muscles cos no clarity of promise until it does take back control of that fund and that TD job. Under art 28 4 of constitution the govt is accountable to Dail.
But TD not invoking Dail power they are elected to on our behalf who pay the bill .
You said there was no bail out. Delaney walked away. Redundancy happens! Been there.. Ross you’re a total disgrace..
That will teach them the doubling of funding and interest free loans, no word of course on deloitte the poor auditors who were mislead after 20 years of consulting and auditing!!
If I had a business in Ireland ,or a mortgage and ran into trouble for a few grand, the state and the banks would be all over me like a rash, yet again the government see fit to bail out the rich kids that squandered money. Shameless Delaney and his pals are pissing themselves knowing they will never be accountable as to where all the 62.000.000 euro went. Crooks
Ane the Irish Tiddly-winks Federation can get on with its business entirely without a government subvention.
@Tony Harris: I find that a silly ruling when English FA/ Scottish FA and IFA all members of UEFA. It is like saying a person cant cross the border to work of they are under 18. All football clubs have responsible households veted to take under 18s in digs… it’s not as if they will be fending for themselves.
I hope this is the last we might see of lord Ross
Just in time for the election. But he got it done and his name is all over it. Played it very well in fairness.
have your say