Credit Suisse chairman's comments draw scrutiny from financial watchdog -sources
21/02/2023 15:33
(Adds detail on CDS)
By Oliver Hirt
ZURICH, Feb 21 (Reuters) - The Swiss financial regulator
is reviewing remarks made by Credit Suisse Group CSGN.S
Chairman Axel Lehmann about outflows from the lender having
stabilised in early December, two people with knowledge of the
matter have told Reuters.
Finma is seeking to establish the extent to which Lehmann,
and other Credit Suisse representatives, were aware that clients
were still withdrawing funds when he said in media interviews
that outflows had stopped, said the two people, who asked to
remain anonymous because the matter was not public.
The development sent the embattled bank's shares down as
much as 5% on Tuesday. The bank's stock, at roughly 2.62 Swiss
francs, is around its lowest in decades. The cost of insuring
exposure to the bank also rose following the news.
A spokesperson for Finma declined to comment. A Credit
Suisse spokesperson said the bank did "not comment on
speculation." Lehmann did not reply to an email seeking comment.
Lehmann told the Financial Times in an interview streamed
online on Dec. 1 that after strong outflows in October, they had
"completely flattened out" and "partially reversed".
The following day he told Bloomberg Television that outflows
had "basically stopped."
Credit Suisse shares rose 9.3% on Dec. 2.
The regulator is reviewing whether Lehmann's statements were
potentially misleading, said the people, with one adding that
Lehmann may not have been briefed correctly before he made those
comments.
Luzerner Kantonalbank described the inquiry, although not a
formal investigation, as another blow for Credit Suisse.
"Was Axel Lehmann insufficiently informed or did he
consciously or did he deliberately gloss over the matter?" said
analyst Daniel Bosshard.
"Whatever the case, this is yet another inglorious chapter
in the history of Credit Suisse."
Credit Suisse said on Feb. 9, when it reported its annual
results, that clients withdrew 110.5 billion Swiss francs
($119.65 billion) from Switzerland's second-largest bank in the
last three months of 2022.
Those outflows exceeded market expectations and rounded off
a weak set of results that led to the stock falling about 15% on
the day.
In response to a question on the distribution of withdrawals
in the period, Chief Executive Ulrich Koerner told analysts that
day that more than 85% of the outflows in the last quarter were
in October and November, according to a transcript of the call.
That led analysts at Citigroup to conclude in a note to
clients that management effectively indicated 15% of the
outflows happened in December.
Finma's scrutiny adds to the challenges faced by Credit
Suisse, which has been rocked by scandals in recent years. The
lender has embarked on a sweeping overhaul to restore
profitability by exiting certain investment banking activities
and focusing on managing money for the wealthy.
In early October a social media storm triggered by an
unsubstantiated report about the bank's financial health
prompted wealthy customers to move deposits elsewhere. The bank
said at the time it was pushing ahead with its restructuring and
remained close to its clients.
Responding to a Reuters request for comment on the Feb. 9
results, Finma said in a statement that while Credit Suisse's
liquidity buffers had a stabilising effect, the regulator
"monitors banks very closely during such situations," referring
to the outflows, which "were indeed significant" in the fourth
quarter. It did not elaborate further.
($1 = 0.9235 Swiss francs)
(Additional reporting by Noele Illien, Stefania Spezzati and
Paul Arnold; editing by Elisa Martinuzzi, Tomasz Janowski and
Mark Potter)
((Noele.Illien@thomsonreuters.com; +41 41 528 39 73;))