Credit Suisse closes the first quarter of the year with benefits, in which it lost more than 62,400 million in deposits

Credit Suisse CEO Ulrich Koerner, third from the right, leaves the entity's shareholders' meeting, held on April 21 in Zurich.MICHAEL BUHOLZER (AP)

Credit Suisse, the Swiss bank that fell from grace in March, published its first quarter results on Monday.

In the first three months of the year, in which its shares sank and it ended up being absorbed by its rival UBS, the entity suffered a massive withdrawal of deposits by its clients —61,200 million Swiss francs (more than 62,400 million euros )—, frightened by a crisis that almost led the second Swiss bank to bankruptcy.

All in all, Credit Suisse posted profits of 12.6 billion euros, mainly influenced by the cancellation of its convertible contingent bonds — known in industry jargon as

— a type of high-risk debt.

With shares in free fall, Swiss authorities lobbied over a hectic weekend for UBS, the country's top bank, to acquire its rival.

Finally, after a push and pull with the price, and the promise of extraordinary guarantees, the purchase for 3,000 million euros was announced on Sunday, March 19, before the markets opened.

The massive withdrawal of liquidity, the bank pointed out in its quarterly publication, "was especially sharp in the days immediately before and after the announcement."

"They stabilized at much lower levels, but to this day the situation has not yet been reversed," admitted the Zurich entity, which in 2022 had already suffered a liquidity outflow of 125,000 million euros that contributed to a huge crisis of trust that led to the sale to UBS.

convertible bonds

Among the extraordinary guarantees that UBS received - the merger was not submitted to a vote by its shareholders: the bank received 9,000 million euros in guarantees to face future losses caused by the purchase and the Swiss National Bank made available a liquidity line of 100,000 million euros—is the cancellation of the

, which caused great indignation among investors.

This cancellation largely explains the benefits announced by the entity: it reduced to zero obligations that totaled, according to the report, 15.3 billion euros.

Coconuts

are an instrument that allows banks to protect themselves against possible turbulence in their capital: when an entity's reserves in relation to its assets fall below a certain threshold, convertible bonds -as their name suggests- are automatically

in shares and thus contribute to restoring impaired capital.

The Swiss authorities decided, reversing the normal order in this type of case, that the

lose all their value, while Credit Suisse shareholders received 3,000 million euros.

This order has led numerous bondholders to file complaints against the Swiss authorities for the losses suffered, or to announce their intention to do so, both inside and outside the Swiss country.

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Credit Suisse has reflected in its quarterly report revenues of 18,800 million euros (four times more than in the same period of 2022), compared to operating expenses of only 5,300 million.

Another extraordinary income linked to the strong profits reported, according to the report, was the sale of a significant part of Credit Suisse's securitized products to the New York firm Apollo, as part of the restructuring process that the entity attempted to get out of its crisis.

Excluding certain extraordinary operations, the bank had adjusted losses of 1,340 million euros in the first quarter of 2023.

The entity's total assets, according to the report, were reduced in the January-March period to 551,000 million, 27% less than a year ago.

Credit Suisse, which is still operating as an independent entity until its merger is complete, has indicated in this report that it continues to work closely with UBS to ensure that the merger is "completed on time", although this is subject to certain business closing operations. which, as both entities have previously indicated, could be delayed.

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