Credit Suisse Group said one or more of its units breached liquidity requirements this month when depositors pulled their money amid speculation about the lender's turnaround plan.
The withdrawals were triggered by "negative press and social media coverage based on incorrect rumors" and made worse because the bank had limited its access to debt markets in the weeks before it unveiled its restructuring plan. Liquidity and funding ratios for the group as a whole have been maintained at all times, Credit Suisse said in a statement Thursday.
"These outflows have partially utilized liquidity buffers at the group level and legal entity level, and we have fallen below certain legal entity-level regulatory requirements," the bank said.
Credit Suisse on Thursday announced the most dramatic steps yet to repair the bank, unveiling a restructuring that will see a multibillion-dollar capital raise, thousands of job cuts and a carve-out of the investment bank. The overhaul is an urgent attempt to restore credibility after a succession of big losses and management chaos shattered its status as one of Europe's most prestigious lenders.
Clients pulled 12.9 billion francs in assets in the third quarter, and the pace of withdrawals accelerated this month as speculation about the overhaul and how Credit Suisse might fund it heated up. The bank said it saw "significantly higher withdrawals of cash deposits as well as non-renewal of maturing time deposits" at the beginning of October, which have slowed since but not yet reversed.
The temporary breaches at the Credit Suisse entities haven't yet prompted regulators to ask the bank to take action, said a person familiar with the matter who asked for anonymity discussing internal information.
The bank has said it's trying to recapture market share with clients and bring deposits back from existing customers who pulled.
Credit Suisse's liquidity coverage ratio, a measure of how well a bank is prepared to deal with sudden withdrawals, stood at an average 192% at the end of the third quarter, one of the highest among European lenders. It dropped to 154% this month through Tuesday, "with lower spot rates over this period that remained below this average through that date," Credit Suisse said.
Lenders are generally expected to maintain a ratio of 100%, though individual regulators can impose additional requirements.
— With assistance from Jeff Black.
