EXCLUSIVE- Swiss financial authorities put the magnifying glass on Credit Suisse

By: News Team

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Swiss financial authorities put the magnifying glass on Credit Suisse

Switzerland’s financial regulator is reviewing remarks by the chairman of Credit Suisse (SIX:CSGNGroup, Axel Lehmann, on stabilising the bank’s outflows in early December, two sources with knowledge of the matter told Reuters.

The news sent the bank’s shares tumbling on Tuesday, losing more than 5% in early trading.

The bank’s shares were trading at 2.62 Swiss francs at 0854 GMT, near their lowest levels in at least 30 years.

Finma is trying to establish the extent to which Lehmann, and other Credit Suisse representatives, were aware that customers were still withdrawing funds when he said in media interviews that the outflows had stopped, said the two sources, who asked to remain anonymous because the matter was not public.

Lehmann told the Financial Times in an interview broadcast online on December 1 that, following strong outflows in October, they had been “completely flattened” and “partially reversed”.

The next day he told Bloomberg Television that the departures had “basically stopped.”

Credit Suisse shares rose 9.3% on Dec. 2.

The regulator is reviewing whether Lehmann’s statements were potentially misleading, the sources said. One of the sources added that Lehmann may not have been properly briefed before making those comments.

A spokesman for Finma declined to comment. A Credit Suisse spokesman said the bank “does not comment on speculation” Lehmann did not respond to an email seeking comment.

Credit Suisse said customers withdrew 110.500 billion Swiss francs ($119.650 billion) from Switzerland’s second-largest bank in the last three months of 2022, when it reported its annual results on Feb. 9.

Outflows reported by the bank beat market expectations and topped off a weak set of results that sent the stock tumbling about 15% on the day.

In response to a question about the distribution of withdrawals in the period, Chief Executive Ulrich Koerner told analysts that day that more than 85% of outflows in the last quarter occurred in October and November, according to a transcript of the call.

This led Citigroup (NYSE) analysts:C) to conclude in a note to clients that management had indeed indicated that 15% of departures had taken place in December.

Finma’s scrutiny adds to the challenges facing Credit Suisse, which has been rocked by scandals in recent years. The bank has embarked on a deep overhaul to restore profitability, abandoning certain investment banking activities and focusing on managing the money of the rich.

In early October, a social media storm triggered by unfounded information about the bank’s financial health led some wealthy customers to move their deposits to another entity. The bank said then that it was going ahead with its restructuring and that it was keeping in touch with its customers.

In response to a request from Reuters for comment on the Feb. 9 results, Finma said in a statement that while Credit Suisse’s liquidity buffers had a stabilizing effect, the regulator “keeps a very close eye on banks during these types of situations,” referring to fund outflows, which “were really significant” in the fourth quarter. He did not elaborate.

(1 $ = 0.9235 Swiss francs)

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