Clients Pull Out $120 Billion From Credit Suisse as Bank Registers Fourth-Quarter Losses, Worst Year Since Financial Crisis
Clients Pull Out $120 Billion From Credit Suisse as Bank Registers Fourth-Quarter Losses, Worst Year Since Financial Crisis

By Naveen Athrappully

Clients from Swiss global investment bank Credit Suisse pulled out a record amount of funds in the fourth quarter as the company posted a worse-than-expected net loss for the period amid declining confidence in the bank.

The bank reported net outflows of 110.5 billion Swiss francs ($120.36 billion) in the fourth quarter, up from 12.9 billion ($14.05 billion) net outflows in the third quarter, according to a Feb. 9th media release (pdf) detailing the company’s fourth-quarter financial results. Net outflows rose by more than 750 percent in the fourth quarter compared to the third quarter. This brought total net outflows in 2022 to 123.2 billion francs ($134.19 billion), a major change when compared to the 30.9 billion francs ($33.66 billion) net inflow reported in 2021.

According to the bank, the fourth-quarter performance was affected by a “challenging economic and market environment, significant deposit and net asset outflows at the beginning of the quarter, and the execution of our strategic actions.” Credit Suisse has been battling confidence loss among clients after years of losses and scandals.

During its November 2022 profit warning, bank executives revealed that clients were already pulling out funds in the first two weeks of October due to concerns about the institution’s stability and its restructuring ability. According to the firm, roughly two-thirds of the outflows were concentrated during that period.

Losses and Scandals

Credit Suisse registered a net loss of 1.39 billion francs ($1.51 billion) for the fourth quarter, which is its fifth straight quarterly loss, following a 4.03 billion francs ($4.39 billion) loss in the third quarter.

The massive quarterly losses resulted in the company posting a loss of 7.3 billion francs ($7.95 billion) for the entirety of 2022, compared to the loss of 1.65 billion francs ($1.8 billion) in 2021. In addition, the loss in 2022 also made it the worst year for the Swiss bank since the financial crisis of 2008–09.

While besieged with losses, Credit Suisse is also under scrutiny for a data leak involving thousands of former clients who reportedly held $100 billion with the bank.

Earlier this month, Switzerland’s Attorney General’s Office confirmed that it was investigating suspected acts of breach of trade secrets, corporate espionage, and violations of banking secrecy laws following the leak of information related to 18,000 accounts last year.

“We have a clear plan to create a new Credit Suisse, and intend to continue to deliver on our three-year strategic transformation by reshaping our portfolio, reallocating capital, right-sizing our cost base, and building on our leading franchises,” said CEO Ulrich Korner.

Profitability, Restructuring

Since October, Credit Suisse has been refocusing on its core wealth management business. In late 2022, the bank raised 4 billion francs ($4.36 billion) in capital. It is also planning to lay off 9,000 jobs as the firm tries to become profitable once again. Last year, the bonus pool at the bank was reduced by half.

The year “2022 was a crucial year for Credit Suisse. We announced our strategic plan to create a simpler, more focused bank, built around client needs, and since October we have been executing at pace,” Korner said.

“We successfully raised CHF ~4 billion in equity capital, accelerated the delivery of our ambitious cost targets, and are making strong progress on the radical restructuring of our investment bank.” In the past year, shares of Credit Suisse have declined by around 64 percent. CHF refers to Swiss francs.

Meanwhile, Credit Suisse foresees its investment bank operation to report a loss in the first quarter of 2023. Overall, the group is expected to report “a substantial loss” before taxes in 2023. Restructuring expenses are estimated to be at approximately 1.6 billion francs ($1.74 billion) this year and around 1 billion francs ($1.09 billion) in 2024.

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