How desperate savers pushed Credit Suisse to the brink
Desperate savers pushed Credit Suisse to the brink: stricken bank reveals how customers withdrew £55bn as they rushed to exit
The extent of the panic among Credit Suisse customers at the height of the biggest financial crisis since 2008 has been revealed.
The Swiss banking giant said account holders withdrew an astonishing £55bn as it teetered towards its demise early this year.
The lender, which is being acquired by Swiss rival UBS, released the numbers as it opened up its performance during the first quarter as it finally came to a close.
When it revealed the magnitude of one of the largest bank runs in history, Credit Suisse called the outflows “significant, particularly in the second half of March 2023.”
Pushed to the brink: Credit Suisse said clients took an astonishing £55bn out of the bank as it teetered towards its demise early this year
Credit Suisse collapsed last month amid a global banking shock that was the biggest since the financial crisis, which also saw the bankruptcy of three US companies, including Silicon Valley Bank.
The latest results come as separate figures pointed to an increase in candidates seeking work in the city in the wake of the unrest.
The staggering level of Credit Suisse’s outflows in the first quarter added to the £99bn pulled out of the bank in the fourth quarter of last year and helped seal its fate.
It admitted it had failed to stop the bleeding even now and said the fund exodus is “moderate but has not yet been reversed”, with account holders still trying to get their money from the 167-year-old lender. to get.
Assets managed by its flagship wealth management company fell 29 per cent to £454 billion compared to the same period in 2022.
The bank revealed it had borrowed £151bn through an emergency loan from the Swiss National Bank, though about £63bn has now been repaid.
Excluding some of the one-off gains due to how the rescue was structured, the bank reported a loss of £1.2bn for the quarter compared to a profit of £271m a year earlier.
Credit Suisse looked like it was on the ropes early this year after a series of scandals, including its involvement with the financial services company Greensill, a Mozambican corruption affair and an episode in which a senior executive was spied on.
The banking crisis that erupted in the US put further pressure on the bank, and the conspicuous failure of its largest shareholder, Saudi National Bank, to offer further financing added to its danger.
That ended when the lender was bailed out by UBS in a quickly put together and controversial deal hatched by Swiss authorities.
The deal provided a small compensation for shareholders and was even worse for holders of £13bn of certain types of bonds, who saw their investments disappear.
Some of those bondholders are now complaining about the losses.
Shares of Credit Suisse rose 0.6 percent yesterday and UBS climbed 0.8 percent after some analysts said results were better than feared. Others, however, were alarmed by the size of the outflow.
Thomas Hallett, an analyst at investment banking firm KBW, said Credit Suisse’s ability to generate income seemed so damaged that the bailout “could continue to be a drag on UBS’s bottom line unless a deeper restructuring plan is announced.”
Credit Suisse employs about 5,000 people in London, but figures suggest many of them could be looking for work amid reports that up to 30 percent of jobs could come from the expanded bank that has sprung up. through the acquisition of UBS.
Figures from global recruiting consultancy Morgan McKinley showed a 19 percent increase in the number of job seekers in the city’s financial sector in the first quarter compared to the end of last year.