Credit Suisse: Capital Flight Continues Amid Q1 Collapse

As the situation at Credit Suisse turned from bad to worse in late March, resulting in its state-brokered takeover by rival UBS, the 167-year-old bank’s customers rushed for the exits, taking their money with them. According to the bank’s latest and possibly last earnings report, it saw net asset outflows of CHF 61 billion ($69 billion) in the first three months of the year, as customer deposits declined by CHF 67 billion ($75 billion).

Even before the collapse of Silicon Valley Bank sent shockwaves across the financial world, shattering trust in the banking sector, Credit Suisse had been struggling with an apparent loss of confidence from its clients. Following a series of scandals and failed investments, the Swiss banking group suffered a huge outflow of deposits and assets under management in 2022, particularly in the fourth quarter, forcing the group to partially utilize liquidity buffers.

Spooked by concerns over the bank’s stability and restructuring efforts, clients withdrew billions of dollars in the first few weeks of October, resulting in a CHF 138 billion ($155 billion) decline in customer deposits by the end of the quarter. Assets under management also declined as Credit Suisse reported net asset outflows of CHF 111 billion ($124 billion) for the fourth quarter, as the group’s wealth management arm alone saw clients withdraw CHF 93 billion ($104 billion) during the last three months of 2022.

According to Monday’s earnings release, capital outflows have “moderated but not yet reversed” as of the date of the report, meaning that capital flight continues despite the imminent takeover by UBS, which is expected to be completed later this year.