Credit Suisse chair says outflows have reversed since ‘social media storm’

The chair of Credit Suisse said clients had started to return to the bank after pulling tens of billions of dollars of assets following a “social media storm” at the start of October.

Axel Lehmann said withdrawals had flattened across the group and had started to reverse in the Swiss domestic business, but the scale of the outflows had caught the Swiss lender off-guard.

“It was a real storm,” said Lehmann at the FT’s Global Banking Summit on Thursday. “It was a storm in the retail and partially in the wealth management segment, in particular in Asia, where we had really massive outflows for two to three weeks.

“The good part of the sad story is we had very few clients leaving. They are still with us, they still continue to do business with us.”

He said clients had been taking up to a third of the assets they held with the bank and transferring them to rivals. “I have anecdotes from clients and I know that the money will certainly come back over time.”

Credit Suisse revealed last month that rich clients had withdrawn about SFr63.5bn ($67.4bn) since the start of October — equivalent to 10 per cent of wealth management assets — following a spate of social media rumours about its financial health.

Spreads on the group’s credit default swaps surged in early October, which indicated investors were becoming increasingly bearish on the group, after a stream of rumours were posted on social media and web forums about the bank’s imminent collapse.

Across the group, the bank bled SFr84bn in the fourth quarter, as private banking, asset management and retail clients moved money from their accounts to rivals.

Credit Suisse said it expected a pre-tax loss of up to SFr1.5bn in the final three months of the year, its fourth profit warning since January.

The bank’s shares have tumbled to 30-year lows in recent weeks, falling to SFr2.70 on Thursday morning, 40 per cent lower than when the bank announced a radical restructuring in late October. The bank’s CDS also remain elevated at close to 450 basis points, compared with 350bp at the start of October, at the height of the social media furore.

Lehmann was installed as chair in January, following the departure of his predecessor António Horta-Osório, who was found to have breached Covid quarantine rules.

Over the summer, Lehmann replaced Thomas Gottstein as chief executive with Ulrich Körner, who had previously run Credit Suisse’s asset management division.

Lehmann and Körner, who worked as senior executives at UBS, have since set about devising a radical plan for Credit Suisse that will involve the bank cutting SFr2.5bn of costs, jettisoning 9,000 jobs and retreating from investment banking over the next three years.

The bank has sought to raise SFr4bn to finance the transition by bringing in new investors such as the Saudi National Bank and through a rights issue, which is expected to be complete this month.

On Thursday, Lehmann said the bank had “shielded” itself from “perceived conflicts of interest” when it decided that its then board member, Michael Klein, should lead the spun-off CS First Boston investment banking business.

Klein had led the board’s committee to devise a strategy for its investment banking business.

Lehmann added that the company had several “offers on the table” from companies that were willing to back the new venture and was in discussions with the US Federal Reserve over its balance sheet, structure and governance.

Credit Suisse had previously said an unnamed investor had pledged $500mn.