By Oke Kay Synder
Ah, Credit Suisse, the once mighty Swiss financial fortress, is now more reminiscent of a leaky sieve. This quarter, the bank has managed to lose a staggering 61 billion Swiss francs ($68 billion) in assets, and the outflows aren’t stopping there. It seems that the deep pockets of the world have decided to give the bank a resounding vote of no confidence, as they pack their bags and search for greener pastures.
With a history that spans 167 years, Credit Suisse should have known better. But alas, in the high-stakes game of finance, even the old guard is not immune to a bout of misfortune. Customer deposits have dropped like flies, shrinking by 67 billion francs in the quarter, with many matured time deposits opting not to renew. It appears that not even the Swiss charm can save this sinking ship.
As we turn the calendar to April 24th, 2023, the bank’s asset hemorrhage has “moderated” but shows no sign of stopping. Most of the fleeing funds come from the wealth management division, and the bank’s client list seems to be shrinking faster than a snowball in a Swiss summer. The first quarter’s outflows follow a 110.5 billion franc exodus in the fourth quarter, leaving one to wonder if the bank’s golden days are now firmly in the rearview mirror.
But fear not! For in this tale of financial woe, a white knight in the form of UBS Group (UBSG.S) has come to the rescue. Or so they hope. As the two Swiss giants prepare to tie the knot in a state-engineered marriage, the question remains whether the union will provide the much-needed stability, or simply give birth to a bigger, more cumbersome financial beast.
Switzerland’s reputation as a trusted global financial center for the ultra-wealthy hangs in the balance. Will the merger of these two globally important systemic banks bring about a brighter future? Only time will tell.
In the meantime, investors seem to be shrugging off the asset exodus, as shares in both UBS and Credit Suisse rose by roughly 2% in morning trade. Perhaps the old adage, “Misery loves company,” holds some truth after all.
So, as the Swiss banks shuffle towards their nuptials, we can’t help but wonder if this tale of money, marriage, and misfortune will have a happy ending. But for now, Credit Suisse remains caught between a rock and a hard place, where the rock is it’s rapidly evaporating assets, and the hard place is a skeptical global financial community.