Credit Suisse predicts £1.32bn loss after clients pull cash from funds
Beleaguered lender Credit Suisse said it expects to haemorrhage up to 1.5bn Swiss Francs (£1.32bn) in its fourth quarter after being rocked by a flood of outflows in October.
The Swiss bank, which last month revealed a sweeping cost-cutting plan that involved slashing around 9,000 jobs, said around six per cent of its total $1.47 trillion assets were yanked from its funds in early October after clients were spooked by a string of scandals.
“Credit Suisse began experiencing deposit and net asset outflows in the first two weeks of October 2022 at levels that substantially exceeded the rates incurred in the third quarter of 2022,” the firm said in an update.
Bosses said a “challenging” economic environment had also hit client activity across its divisions, with its investment banking suffering a sharp slump in fees as capital markets activity dries up.
The profit warning marks the latest blow to the firm as it scrambles to turn around its fortunes after posting consecutive losses this year.
Credit Suisse chief Ulrich Koerner is looking to rip costs out of the firm and restructure its investment bank by selling off a portion to Apollo Global Management.
Shareholders also gave the greenlight to a 4bn Swiss franc capital raise today as part of the emergency recovery plans as it looks to shore up its balance sheet.
Investors were spooked by the update today however, sending shares tumbling around 4.25 per cent at the time of publication. The firm is trading at near 60 per cent discount to its price 12 months ago.
Analysts at Wall Street giant JP Morgan said the figures were “weak” and showed the firm was “not out of the woods yet”.
Analyst Kian Abohossein added that he was “perplexed about the material pretax loss” in the investment banking unit as the market had not been hit by a sharper slowdown than expected in the fourth quarter.
The bank has been struggling to steady the ship since chief Tidjane Thiam was ousted in early 2020 over a corporate espionage scandal.
It was then rocked by ties to the twin implosions of Archegos Capital and Greensill Capital in the same year which left it nursing billions of dollars of losses and caused it to freeze client funds.