New Delhi: Credit Suisse Group AG, one of the leading Swiss lenders, has reported a massive outflow of 61.2 billion francs ($69 billion) in the first quarter of 2023. The outflow highlights the challenge for UBS Group AG in retaining clients and assets after the emergency takeover of its biggest rival. The bank reported net outflows of 47.1 billion francs at the key wealth management unit, and attributed a 1.3 billion franc impairment charge mostly to that business. Credit Suisse has said that the outflows have moderated but not reversed. At the Swiss unit, the firm saw a 6.9 billion of outflows, mostly private clients business.
Several wealthy clients and retail depositors pulled billions from Credit Suisse in March after its anchor shareholder said that it would not invest more in the company. This capped several years in which the bank had faced one crisis after another. The scale of the outflows and losses highlights the risks for UBS in an integration that the bank has said may take up to four years.
Credit Suisse had started its latest restructuring in October, which included as many as 9,000 job cuts, as it sought to return to profitability. The continuation of asset exits and banker departures now raises questions about the state of the wealth business that UBS will inherit once the deal closes later this year. The firm has said that it expects a substantial loss in wealth management this year.
Iqbal Khan, the head of UBS Wealth Management, and his Credit Suisse counterpart have made appearances in townhalls to inform important employees that the new owner will provide incentives and retention packages in an effort to slow the exodus of talent. Khan previously oversaw the worldwide wealth division at Credit Suisse, and his intervention reflects UBS’s worry that rivals may take advantage of the turmoil to swoop in and steal customers and employees.
After a social media uproar raising concerns about the bank’s financial soundness sparked a run for the doors, Credit Suisse had lost around 110 billion Swiss francs worth of assets in the fourth quarter.
The challenges facing Credit Suisse highlight the difficulties faced by banks in retaining clients and assets in an increasingly competitive landscape. Banks are under pressure to invest in technology and innovation to offer a seamless and frictionless experience to their clients, while at the same time ensuring that they maintain the highest levels of security and compliance. The COVID-19 pandemic has led the shift to digital channels and highlighted the need for banks to provide robust and reliable digital services.
In conclusion, Credit Suisse’s massive outflows in the first quarter of 2023 highlights the challenges faced by UBS in retaining clients and assets after the takeover of its biggest rival. The continuation of asset exits and banker departures ponders questions about the state of the wealth business that UBS will inherit. The bank has said that it expects a substantial loss in wealth management this year. To stem the exodus of talent, UBS is offering incentives and retention packages to key staff. The challenges facing Credit Suisse underscore the need for banks to invest in technology and innovation to offer a seamless and frictionless experience to their clients.