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November 24, 2022

Credit Suisse projects $1.6bn loss in Q4 as affluent clients withdraw money

Credit Suisse Group has warned that it may register CHF1.5bn ($1.6bn) loss in the fourth quarter of this year after wealthy clients continue to withdraw money amid concerns over financial wellbeing of the bank.

The massive withdrawals have plunged the bank’s liquidity level and breached certain regulatory requirements.

However, the bank continued to maintain its mandatory group-level liquidity and funding ratios all the times, stated the embattled bank.

As of 18 November 2022, the bank’s average daily liquidity coverage ratio (LCR) for the last quarter stood at 140%, with spot rates fluctuating between 120% to 130% since it unveiled its Q3 results last month.

According to Credit Suisse, its net asset outflows reached nearly 6% of its assets under management (AUM) between 30 September and 11 November.

In wealth management division, these outflows represent around 10% of AUM at the end of the last quarter.

Though the pace of outflows in wealth management slowed, it has not reversed, added the bank.

Meanwhile, shareholders of the bank have approved a CHF4bn ($4.2bn) plan to raise capital from investors for facilitating its overhaul.

The approval was granted for two planned capital raises that were announced on 27 October 2022.

Credit Suisse chairman of board of directors Axel Lehmann said: “This vote confirms confidence in the strategy, as we presented it in October, and we are fully focused on delivering our strategic priorities to lay the foundation for future profitable growth.”

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