CS, Bank Run Hits 91 Trillion Won in Q1 This Year

More than 90 trillion won in funds flowed out in the first quarter alone from Swiss investment bank Credit Suisse (CS), which was acquired by competitor UBS amid a liquidity crisis.

According to CS's first-quarter business report released on the 24th (local time), customers withdrew 61.2 billion Swiss francs (approximately 91.8 trillion won) from amounts deposited in wealth management and deposit departments during this period. It was confirmed that about 9% of customer assets were withdrawn from the main wealth management department alone. The report added that due to the lowered fee outlook, significant losses are expected in the wealth management sector in the second quarter.

[Image source=Reuters Yonhap News]

CS, pushed into a liquidity crisis by successive investment failures, was acquired by UBS last month under the leadership of Swiss authorities. Following the merger news of the two banks, CS customers, concerned about asset safety, rushed to withdraw large-scale deposits. The report stated, "There was a particularly large net asset outflow after UBS confirmed the acquisition of CS on the 19th of last month," and "Outflows stabilized this month, but there has been no reversal of the situation."

CS posted a net profit of 12.8 billion Swiss francs in the first quarter. However, this is a nominal figure due to the write-down of CS's high-risk bonds. Previously, following regulatory guidelines, CS decided to fully write down 16 billion Swiss francs worth of Additional Tier 1 (AT1) capital securities among its bonds. Excluding the AT1 bond write-down, CS is understood to have recorded a pre-tax loss of 1.3 billion Swiss francs in the first quarter of this year.

Currently, experts point out that the unprecedented losses and outflows could pose a burden on UBS's future management. UBS, which decided to acquire CS, will release its earnings on Tuesday, the 25th.

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