Exclusive-Credit Suisse chairman’s comments draw scrutiny from financial watchdog -sources

By Oliver Hirt

ZURICH (Reuters) – The Swiss financial regulator is reviewing remarks made by Credit Suisse Group 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)