£55 billion was withdrawn from Credit Suisse prior to rescue

Credit Suisse has disclosed the magnitude of the bank panic that prompted its March state-backed rescue.

In the first three months of the year, 61.2 billion Swiss francs (£55.2 billion; $68.6 billion) departed the bank, according to the Swiss banking giant.

It occurred as the lender reported what is likely its final financial results.

It is anticipated that the forced sale to rival Swiss bank UBS will be finalized shortly.

Credit Suisse’s primary wealth management division saw its managed assets fall to 502.5bn francs at the end of March, a decrease of nearly 29% compared to the same time last year, according to a statement.

“These outflows have moderated, but have not yet reversed as of April 24, 2023,” the report continued.

After Credit Suisse was caught up in the market turmoil that followed the collapses of Silicon Valley Bank and Signature Bank in March, clients began withdrawing funds.

The Swiss government formulated a rescue program for Credit Suisse. It involved more than 200 billion Swiss francs in financial guarantees and the acquisition of Credit Suisse by UBS.

In recent years, Credit Suisse had been losing money and faced several issues, including money laundering allegations.

It reported a loss of 7,3 billion Swiss francs in 2022, its worst year since the 2008 financial crisis, and warned it would not be profitable until 2024.

Frances Coppola, an independent banking analyst, stated that Credit Suisse had also experienced withdrawals of billions in the final three months of 2022, as she commented on the most recent financial results.

Then, of course, this quarter’s [withdrawals] were added. And banks cannot sustain outflows of this magnitude, regardless of their size.”

M&G Wealth Investments’ chief investment officer, Shanti Kelemen, predicted “substantial” withdrawals given the bank’s size.

Today, if nothing else, we have substantiation of what UBS has purchased.

Silicon Valley Bank and Signature Bank failed in the US as rising interest rates devalued their assets.

Investors raced to withdraw their funds from Credit Suisse, which was already in a precarious position, out of concern that other financial institutions might experience similar difficulties.

Since then, concerns regarding other institutions have diminished, but Ms. Coppola indicated that others may still encounter difficulties.

“I believe there will be more financial turmoil. I do not know if this will affect the largest institutions in this manner.”

Swiss prosecutors have initiated an investigation into the sudden acquisition of Credit Suisse, the second-largest bank in the country.

The transaction has infuriated taxpayers and shareholders of both banks, who were denied the opportunity to vote on the acquisition. Some have also argued that it has hurt Switzerland’s reputation as a global financial center.

Credit Suisse was valued at $3.15 billion (£2.6 billion) when the deal was disclosed. Whereas it was valued at $8 billion on the Friday before the settlement was reached.