The banking giant Credit Suisse is seeing its financial health continue to deteriorate sharply. Since the beginning of October, 10% of assets held have been withdrawn by clients. This raises questions about the long term viability of the institution
Clients are fleeing Credit Suisse
Rumours were circulating on social networks, and they have been confirmed. In less than three months, 88 billion dollars have left Credit Suisse. This is unprecedented for the banking giant, which has issued a third statement in the form of a warning about its financial health. In the fourth quarter, the projected loss could reach 1.5 billion Swiss francs.
To cope with the exodus of clients, Credit Suisse has been forced to draw on its liquidity reserves. And the trend has only continued in recent weeks, according to the statement:
“Credit Suisse began experiencing net asset and deposit outflows in the first two weeks of October 2022, at levels that significantly exceed those of the third quarter of 2022. “
In total, Credit Suisse saw 10% of its assets under management soar, or 63 billion Swiss francs of the 88 billion lost by the group as a whole. This type of monumental loss is usually seen in full-blown crisis years. That they occur in such a short time frame shows the considerable danger the financial institution is in.
An emergency meeting and restructuring to come
Credit Suisse’s shareholders met on Tuesday to vote. It was decided to raise 4 billion dollars from investors to fully restructure the group to save it from bankruptcy. Last month, the bank had already announced drastic measures. It had laid off thousands of employees, spun off its investment arm and mentioned this fundraising that has just been voted on.
All this does nothing to support CSGN’s share price, which continues its fall that began in the middle of the month:
Credit Suisse share price continues its slide
Will the government have to step in to bail out Credit Suisse? This is of course a possibility, as the institution carries so much weight locally and globally. The parallels can be drawn with the fall of FTX, as the cryptocurrency exchange also saw massive withdrawals as rumors of insolvency spread. Except that for Credit Suisse, a potential collapse would have far more far-reaching consequences.
