How desperate savers pushed Credit Suisse to the brink

The extent of the panic among Credit Suisse customers at the height of the biggest financial crisis since 2008 has been revealed.

The Swiss banking giant said that account holders withdrew an astonishing £55billion as it staggered to its demise at the start of this year.

The lender, which is being taken over by Swiss rival UBS, disclosed the figures as it lifted the lid on its performance during the first quarter when it finally met its end.

As it revealed the extent of one of the biggest bank runs in history, Credit Suisse called the outflows ‘significant, in particular in the second half on March 2023’.

Pushed to the brink: Credit Suisse said that customers pulled an astonishing £55bn out of the bank as it staggered to its demise at the start of this year

Credit Suisse collapsed last month amid a global banking shock that was the biggest since the financial crisis which also saw three US firms fold, including Silicon Valley Bank.

Its latest results come as separate figures pointed to a surge in candidates looking for work in the City in the wake of the turmoil.

The staggering level of outflows from Credit Suisse in the first quarter added to the £99billion that was pulled out of the bank in the fourth quarter of last year and helped to seal its fate.

It admitted that even now, it had not managed to halt the bleeding, saying that the exodus of funds ‘have moderated but have not yet reversed’ with account holders still scrambling to get their cash out of the 167-year-old lender.

Assets managed by its flagship wealth management arm fell by 29 per cent to £454billion compared with the same period in 2022.

The bank revealed that it had borrowed £151billion via an emergency loan facility from the Swiss National Bank though about £63billion has now been repaid.

Stripping out some of the one-off gains resulting from the way its rescue was structured, the bank reported a loss of £1.2billion for the quarter compared to a £271million profit a year earlier.

Credit Suisse already looked like it was on the ropes at the start of this year after a string of scandals including its involvement with supply chain finance firm Greensill, a Mozambican corruption affair and an episode in which a senior executive was spied on.

The banking crisis that erupted in the US put further pressure on the bank and the conspicuous failure of its biggest shareholder, Saudi National Bank, to offer further funding, added to its peril. 

That ended with the lender being rescued by UBS in a rapidly put-together and controversial deal hatched by Swiss authorities. 

The deal offered small recompense for shareholders and was even worse for holders of £13billion in certain types of bonds, who saw their investments wiped out.

Some of those bond holders are now suing over the losses.

Shares in Credit Suisse rose 0.6 per cent and UBS climbed 0.8 per cent yesterday after some analysts said the results were better than feared. However, others were alarmed by the magnitude of the outflows.

Thomas Hallett, analyst at investment banking firm KBW, said Credit Suisse’s ability to generate revenue seemed so damaged that its rescue ‘could well remain a drag on UBS operating results unless a deeper restructuring plan is announced’.

Credit Suisse employs around 5,000 people in London but figures suggest many of them could be looking for work amid reports that up to 30 per cent of jobs could go from the enlarged bank created by the UBS takeover.

Figures from global recruitment consultancy Morgan McKinley showed a 19 per cent increase in job seekers in the City’s financial sector in the first quarter compared to the end of last year.

This post first appeared on Dailymail.co.uk