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Credit Suisse warns for losses.

 

Credit Suisse has forecast a pre-tax loss of up to SFr1.5bn in the fourth quarter, with the Swiss bank reporting that wealthy clients had withdrawn up to 10 per cent of assets since the start of October.

In its fourth profit warning since January, the bank said the scale of the client outflows — after a string of social media rumours about its health — had led the bank to dip into liquidity buffers at the group and legal-entity level.

Credit Suisse said it had «fallen below certain legal-entity-level regulatory requirements».

Across the group, the bank bled SFr84bn of assets as wealth management, asset management and retail banking customers switched cash holdings, investments and deposits to rivals.

JPMorgan analyst Kian Abouhossein said the bank was «not out of the woods yet stabilising the franchise. Wealth management outflows at 10 per cent of assets under management in the fourth quarter are very material at a level seen by UBS in the global financial crisis on an annualised basis and not in one quarter».

The stock fell 6.1 per cent yesterday to SFr3.62, its lowest for at least 30 years, having dropped 60 per cent this year.

The bank said earlier yesterday that its wealth management unit was likely to post a loss after net interest income took a hit from lower deposits and fees.

It also expects the investment bank to make a pre-tax loss after what it described as a «substantial industry-wide slowdown in capital markets».

«The massive net outflows in wealth management, Credit Suisse’s core business alongside the Swiss bank, are deeply concerning, even more so as they have not yet reversed,» said Vontobel’s Andreas Venditti. «Credit Suisse needs to restore trust as fast as possible, but that is easier said than done».

The bank confirmed its capital ratio guidance issued last month, targeting a common equity tier-one ratio of more than 13.5 per cent by 2025 and at least 13 per cent from 2023 to 2025.

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  1. Trevor24 November 2022 at 11:00

    Credit Suisse needs to do something and do it fast. They can't afford to lose many more clients before getting into serious problems. They need to 10x their efforts into retaining older clients and calming their nerves and also acquiring new clients.

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