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HomeMarketCredit Suisse Warns of $1.6 Billion Loss After Clients Withdraw Funds

Credit Suisse Warns of $1.6 Billion Loss After Clients Withdraw Funds

Credit Suisse faced speculation about its financial health of social media for several weeks in October.

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Fabrice Coffrini/AFP via Getty Images

Embattled bank
Credit Suisse
warned it will lose about $1.6 billion in the fourth quarter after its clients withdrew deposits and funds.

The announcement gives some figures about the turmoil that struck the bank last month, when it faced a flurry of speculation about its financial health on social media. The company eventually announced a sweeping overhaul with its quarterly earnings on Oct. 27.

The Swiss lender had outflows of some 6% of its $1.5 trillion of assets between Sept. 30 and Nov. 11. that is equivalent to about $88 billion. Its wealth management arm had outflows of about $67 billion. That pushed its liquidity below some requirements in local jurisdictions, but it maintained group-level liquidity requirements at all times.

The company’s American depositary receipts dropped about 5% in premarket trading.

Credit Suisse (ticker: CS) is still reeling from a series of setbacks, including a $5.5 billion hit from the collapse of Archegos Capital last year. In October, it said it would reduce overall head count by 9,000 over the next three years. 

The bank is asking for shareholder approval on Wednesday to raise $4 billion by selling shares. It also plans to hive off most of its investment bank into a separate unit under the First Boston brand.

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