by Noele Illien, Stefania Spezzati
(MAINNEWS) – ZURICH, 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.
The development sent the embattled bank’s shares downwards on Tuesday, shedding more than 5% in early trading.
The bank’s stock was trading at 2.62 Swiss francs at 0854 GMT, around its lowest levels in at least 30 years.
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.
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 the 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.
A spokesperson for Finma declined to comment. A Credit Suisse spokesperson said the bank does “not comment on speculation.” Lehmann did not reply to an email seeking comment.
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 clients withdrew 110.5 billion Swiss francs ($119.65 billion) from Switzerland’s second-largest bank, in the last three months of 2022 when it reported its annual results on Feb. 9.
The outflows reported by the bank 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 happened 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 had 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.