As a result of a mass departure of wealthy clients, Credit Suisse announces a $1.6 billion loss in the current quarter. However, the shares fell once further when the fallen Swiss banking giant stated the news on Wednesday.
Since the beginning of October, high net worth individuals from around the world have withdrew 10% of all assets managed by the bank’s important wealth management division. This will result in a sharp decline in fees at the division, around which Chief Executive Ulrich Koerner hopes to rebuild the bank.
In addition, Credit Suisse, as a result of the $1.6 billion loss, claimed that a “difficult” economic and market climate had reduced client activity. Also, at the start of the fourth quarter, cash withdrawals had increased across the board.
The troubled lender, which had earlier predicted a net loss for the remaining three months of the year but did not provide a figure, has now issued a profit warning, which is the latest setback.
The bank also provided a dismal evaluation of the severity of its issues, which have been made worse by investors’ withdrawals of their savings and assets.
Credit Suisse reported that at the end of the third quarter, there had been an outflow equal to 6% of the assets managed by the group. The wealth management division’s pattern of serving wealthy clients, according to the report, has since improved but has not yet reversed.
Moreover, the bank claimed that its basic liquidity and funding requirements had been met, but as a result, it was forced to tap into its liquidity buffers, dropping below some minimal regulatory standards.
In contrast to the much more alarming developments in Wealth Management, which had echoes of the 2008 financial crisis when it concerned investors about the safety of their investments, its domestic division had also witnessed a modest withdrawal of about 1% of net assets.
