Credit Suisse on Monday posted a profit of 12.43 billion Swiss franc ($13.93 billion) for the January-March period (first quarter) of 2023. The profit was a result of the write-off of the AT1 bonds worth 15 billion Swiss francs by the Swiss regulator as part of its deal with the UBS.

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The Swiss bank revealed it suffered net asset outflows worth 61.2 billion Swiss francs ($68.6 billion) during the January-March period, which culminated in the emergency rescue by UBS.

Last month, UBS Group AG agreed to buy Credit Suisse Group AG in a historic, government-brokered deal aimed at containing a crisis of confidence that had started to spread across global financial markets.

Swiss authorities had brokered the 3 billion Swiss franc deal following the collapse in the lender's deposits as well as share price amid fears of a banking crisis globally, triggered by the US lender Silicon Valley Bank's fall.

The Monday's earnings report, could be the last of Credit Suisse's 167-year history. The lender said it experienced significant net asset outflows, mainly in March 2023, which it said have now moderated but not yet reversed, as of April 24, 2023.

First-quarter net outflows tallied to 61.2 billion, which was 5 percent of the group’s assets under management as of 2022-end. Deposit outflows were at 57 percent of the net asset outflows from its wealth management unit as well as Swiss bank for the quarter.

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“In the second half of March 2023, Credit Suisse experienced significant withdrawals of cash deposits as well as non-renewal of maturing time deposits. Customer deposits declined by CHF 67 billion in 1Q23,” the bank said, CNBC reported, adding, “These outflows, which were most acute in the days immediately preceding and following the announcement of the merger, stabilized to much lower levels, but had not yet reversed as of April 24, 2023.”

The acquisition is expected to complete by this year-end, if possible. However, the entire absorption of Credit Suisse's business into the group is likely to take around four years.

UBS on Monday said Christian Bluhm, its group chief risk officer, would remain in post because of the planned acquisition of Credit Suisse, delaying the planned May 1 handover to Damien Vogel, who would take up the group risk control head of integration role.

The deal is mired in legal as well as logistical challenges, as it particularly surrounds the wipeout of $17 billion of the AT1 bonds of Credit SUisse. Swiss regulator FINMA is facing a lawsuit from bondholders regarding the decision to write the AT1 bonds, which are widely considered as relatively risky payments, down to zero, while the stock investors would receive payouts as part of the takeover.

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First Published:Apr 24, 2023 12:14 PM IST