Credit Suisse ran into financial troubles after years of scandals, losses and risk management failures. The bank threatened to fail, but was bought out by its biggest Swiss competitor UBS last month. In addition, the Swiss government has offered guarantees worth billions. (ANP/Associated Press)
Credit Suisse ran into financial troubles after years of scandals, losses and risk management failures. The bank threatened to fail, but was bought out by its biggest Swiss competitor UBS last month. In addition, the Swiss government has offered guarantees worth billions.
According to Credit Suisse, the outflow of capital from the bank has decreased, but has not yet stopped. Assets under management collapsed in the first quarter to around 503 billion francs (about 513 billion euros), from 707 billion francs a year ago.
In the recent quarter, the bank posted one-off income of more than 12 billion francs (about 12.3 billion euros) following the controversial writedown of some of the bank’s bonds due to the UBS takeover. At the time of the March bailout, investors held bonds that could be converted into Credit Suisse stock to absorb losses should financial problems hit.
In total, these so-called AT1 bonds were worth around 16 billion euros before the Credit Suisse takeover, but after the bailout it was zero. The adjusted pre-tax loss in the first quarter amounted to 1.3 billion francs, or more than 1.3 billion euros.
UBS’s acquisition of Credit Suisse is expected to close soon. At UBS, Swiss Sergio Ermotti has now succeeded Dutchman Ralph Hamers as the bank’s point man to steer the merger with Credit Suisse in the right direction.
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