Credit Suisse’s Clients Were Flying Out the Door. Lessons for the Next Time.

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Credit Suisse was bought by rival UBS in a deal brokered by Swiss authorities.


Pascal Mora/Bloomberg

Credit Suisse,
the lender acquired by rival
UBS
last month in a deal brokered by the Swiss government and central bank, said it had lost some $75 billion in deposits in the first quarter.

That followed the loss of $120 billion in the final three months of 2022 and shows the urgency of authorities’ actions over a fraught weekend when the deal was done. It also illustrates the importance of acting quickly once confidence is lost.

A disorderly collapse of Credit Suisse (ticker: CS) could have unleashed a global banking crisis if authorities hadn’t stepped in to protect the remaining customers. UBS (UBS) ended up buying the bank for about $3 billion. It received extensive government backstops and a write-off of $17 billion of Additional Tier 1 bonds in the negotiations.

The problems at Credit Suisse, came amid broader turmoil among banks which has mostly subsided. In the U.S., Silicon Valley Bank and
Signature Bank
failed, putting the focus on regional lenders that might have faced similar problems.
First Republic Bank
(FRC), which reports earnings Monday, was helped back from the brink by larger banks led by
JPMorgan Chase
(JPM) placing additional deposits with the lender.

Credit Suisse disclosed the scale of its deposit losses when it reported first-quarter results on Monday. It will probably be its last report as an independent company, as the deal with UBS is expected to close in the second quarter.

Credit Suisse’s planned acquisition of former Citigroup banker Michal Klein’s boutique has also been terminated, the bank said. That deal had been a central plank of Credit Suisse’s turnaround plan.

Write to Brian Swint at [email protected]

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