Zurich The major Swiss bank Credit Suisse confirmed its loss forecast for the fourth quarter before the shareholders voted on a billion-dollar capital increase.
According to information from Wednesday, the crisis-ridden institute expects a pre-tax deficit of up to CHF 1.5 billion in the period from October to December.
Credit Suisse continues to struggle with high outflows of funds in wealth management. Since the end of September, the bank’s assets under management have shrunk by ten percent, Credit Suisse said. This ensures less net interest income and a lower recurring commission and fee income.
In the first two weeks of October alone, customers had withdrawn six percent of their invested assets. Credit Suisse even had to tap its liquidity reserve for a short time in order to service the account terminations.
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This trend has slowed since mid-October, but has not yet stopped completely, the bank said. After all: In the Swiss business, the assets under management have largely stabilized.
Social media rumors are causing uncertainty
While the top management around CEO Ulrich Körner was working on a new strategy, rumors about an impending collapse of the bank suddenly began to spread in social media at the beginning of October.
The stock seemed to plummet on those smells alone – and even credit default swaps for bonds from Credit Suisse rose in price rapidly. This caused uncertainty among customers worldwide – but particularly so in Asia.
Since Körner presented his new corporate strategy and extensive savings programs at the end of October, the nervousness has subsided. On Wednesday, the bank confirmed its goal of achieving an equity ratio of 13.5 percent by the end of the year.
But the corporate restructuring and job cuts amounting to five percent of the workforce devour a lot of money. In addition, there is a risk of further depreciation on the value of property or software, the money house warned.
To finance the restructuring, the bank is collecting four billion francs of fresh money through two capital increases that are to be decided at an extraordinary general meeting on Wednesday. The largest bank in Saudi Arabia, SNB, had announced that it would subscribe to a large part of the capital increase.
With agency material.
More: “Historical moment”: Credit Suisse reports billions in losses and radical restructuring