£55bn withdrawal from Credit Suisse before bailout

Credit Suisse has revealed the size of the banking run that triggered the state-backed bailout in March.
The Swiss banking giant said 61.2 billion Swiss francs (£55.2 billion; $68.6 billion) left the bank in the first three months of the year.

It comes as the lender announces what is expected to be its latest financial results. The forced sale of it to its rival, Swiss bank UBS, will be completed soon. Credit Suisse’s flagship asset management division saw the amount of assets it manage fall to 502.5 billion francs at the end of March, nearly 29% lower than the same period last year, Credit Suisse said in a statement.

“These outflows have been moderated but have not yet reversed as of April 24, 2023,” he added. Credit Suisse customers began withdrawing cash from the bank after being caught up in the market turmoil following the collapse of Silicon Valley Bank and Signature Bank in the United States in March. In Switzerland, authorities launched a plan to rescue Credit Suisse. It included more than 200 billion francs of financial guarantees and saw UBS agree to take over Credit Suisse. Credit Suisse has been losing money and has faced a host of problems in recent years, including allegations of money laundering.

It reported a loss of 7.3 billion Swiss francs in 2022 the worst year since the 2008 financial crisis and warned that it would not be profitable until 2024. Switzerland investigates UBS’s acquisition of Credit Suisse Credit Suisse investors ‘tricked’ by banks Commenting on the latest results, Frances Coppola, an independent banking analyst, told the BBC’s Today program that Credit Suisse also suffered billions of dollars in withdrawals in the last three months of 2022. “Then, of course, this quarter’s [outflows] went above that. And banks can’t survive such outflows, they really don’t exist, although they are very important. important.” Shanti Kelemen, chief investment officer at M&G Wealth Investments, said that given the size of the bank, the cash outflow “will be a lot”. “If anything today we have confirmation of what UBS bought.”

The failure of Silicon Valley Bank and Signature Bank in the United States came after the value of the assets they held plummeted due to rising interest rates. Bank shares around the world fell sharply as other lenders could face similar problems and investors rushed to withdraw money from the already struggling Credit Suisse. Since then, concerns about other banks have eased, but Ms Coppola said others could still be in trouble. “I think we’re going to see more banking turmoil. I don’t know if it’s going to affect really big banks like this.”

Swiss prosecutors have opened an investigation into the surprise takeover of Credit Suisse, the country’s second-largest bank. The deal angered taxpayers and shareholders of both banks, who were stripped of their right to vote on the takeover. Some have also argued that it has damaged Switzerland’s global reputation as a financial centre. The deal, when announced, valued Credit Suisse at $3.15 billion (£2.6 billion), while on Friday before the settlement it was valued at around $8 billion.

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