Wealthy clients are withdrawing assets from Credit Suisse accounts

Summary:

• Wealthy clients have withdrawn up to 10% of their assets from Credit Suisse.
• The bank has been using liquidity buffers.
• Credit Suisse stocks are suffering.

Credit suisse stock price is taking a dive

Since the beginning of October, wealthy clients have withdrawn up to 10% of their assets, according to the troubled Swiss bank Credit Suisse, which has estimated a pre-tax loss of up to SFr1.5 billion ($1.6 billion) for the fourth quarter.

The bank stated in its fourth profit warning since January that the size of the client outflows, which came after a series of social media rumors about its financial health, had caused the bank to use up liquidity buffers at the group and legal entity level. According to Credit Suisse, it "fell short of some legal entity-level regulatory criteria." According to the statement, the wealth management division has experienced outflows totaling roughly SFr63.5 billion, or 10% of the assets under management at the end of the third quarter.

The bank lost about SFr84 billion ($89 billion) in assets across the board as clients in wealth management, asset management, and retail banking switched their cash holdings, investments, and deposits to rivals.

According to the statement, the wealth management division has experienced withdrawals totaling roughly SFr63.5 billion, or 10% of the assets under control at the end of the third quarter.

The bank also reaffirmed its capital ratio guideline from last month, which aimed for a common equity tier one ratio of more than 13.5% by 2025 and at least 13% from 2023 to 2025 as a measure of financial stability. It did, however, show that since the end of September, the liquidity capital ratio, which measures a company's capacity to absorb short-term stress, had dropped from 192% to a daily average of 140%. Regulators mandate that the bank maintain a percentage above 100%.

✕ CS Price Chart

Sources: finance.yahoo.com, ft.com