Customers withdraw $120 billion from Credit Suisse as banks post worst fourth quarter loss since financial crisis

Credit Suisse clients, the Swiss global investment bank, withdrew record amounts in the fourth quarter as confidence in the bank declined and the company posted a lower-than-expected net loss for the period .

February 9 media release (pdf) details the company’s fourth quarter financial results. Net outflows in the fourth quarter increased more than 750% compared to the third quarter. This brings total net outflows to 123.2 billion francs ($134.19 billion) in 2022, a significant change when compared to net inflows of 30.9 billion francs ($33.66 billion) reported in 2021.

The bank said its fourth-quarter results were impacted by “challenging economic and market conditions, significant outflows of deposits and net assets early in the quarter, and execution of strategic actions.” Credit Suisse has battled customer credit losses after years of losses and scandals.

In a November 2022 earnings warning, bank executives revealed that customers had already withdrawn funds in the first two weeks of October due to concerns about the institution’s stability and ability to restructure. About two-thirds of the outflows were concentrated during that period, the company said.

loss and scandal

Credit Suisse posted a net loss of 1.39 billion francs ($1.51 billion) in the fourth quarter.

Massive quarterly losses saw the company post a full 2022 loss of CHF7.3 billion ($7.95 billion), compared to a loss of CHF1.65 billion ($1.8 billion) in 2021 . It was the worst year for Swiss banks since the 2008-09 financial crisis.

Credit Suisse is also under scrutiny for a data breach involving thousands of former customers who reportedly held $100 billion in the bank while plagued by losses.

Earlier this month, the Swiss Attorney General’s office confirmed that it was investigating alleged trade secret violations, corporate espionage and violations of the Bank Secrecy Act after information on 18,000 accounts was leaked last year. .

“We have a clear plan to create a new Credit Suisse and will undergo a three-year strategic transformation by reshaping our portfolio, reallocating capital, righting our cost base and building key franchises. We will continue to make it happen.” CEO Ulrich Korner.

Profitability, structural reform

Since October, Credit Suisse has refocused its core wealth management business. In late 2022, the bank raised his 4 billion franc ($4.36 billion) capital. It also plans to lay off 9,000 people to make the company profitable again. Bank bonus pools were halved last year.

“2022 has been an important year for Credit Suisse. , and we’re doing it at our pace,” says Korner.

“We have successfully raised CHF 4 billion in capital, accelerated the achievement of our ambitious cost targets and are making strong progress on the fundamental restructuring of our investment banking.” Swiss stocks fell about 64%. CHF stands for Swiss Franc.

Meanwhile, Credit Suisse expects its investment banking business to report losses in the first quarter of 2023. Overall, the group is expected to report a “significant loss” before tax in 2023. Restructuring costs are estimated at around 1.6 billion francs ($1.74 billion for him this year), and about 1 billion francs ($1.09 billion) in 2024.