Credit Suisse chairman avoids regulatory action over outflow demands

The Swiss market regulator has closed its investigation into the statements made by Axel Lehmann, Chairman of Credit Suisse, on customer outflows, as there are insufficient grounds for a supervisory procedure.

Finma said on Friday it had completed an investigation it had begun last month into possible breaches of financial markets law over statements made by Lehmann in December in the final days of the bank’s crucial capital increase.

“After completing her investigations, she sees no sufficient reason to initiate a supervisory procedure,” said the regulatory authority.

“However, she has made it clear what she expects from the bank in terms of her future communications.”

Lehmann told media outlets including the Financial Times and Bloomberg in early December that client outflows had “fully flattened out” and “essentially stopped” after a period of heavy bleeding at the Zurich-based lender.

But when Credit Suisse released its fourth-quarter results last month, the bank said the outflows continued throughout December and into January, albeit at a much slower pace than in October and November.

This prompted Finma to examine the accuracy of Lehmann’s statements. Credit Suisse management, including CEO Ulrich Körner, has also looked into the matter, people familiar with the matter said.

Clients withdrew CHF111 billion (US$121 billion) from the group in the last three months of 2022, with two-thirds of the outflows occurring in October, when the bank was hit by rumors on social media about its financial health.

The wealth management business accounted for SFr92.7 billion of outflows in the quarter, beating SFr61.9 billion expected by analysts.

At the time of the Lehmann interviews, Credit Suisse was trying to persuade shareholders to participate in a rights issue that would help the bank raise the CHF 4 billion needed for a radical restructuring.

The day before Lehmann’s first interview with the FT on December 1, the bank’s shares reached an all-time low of CHF 2.70.

At least two US law firms said they were preparing class action lawsuits against Credit Suisse following the Finma investigation.

Credit Suisse stock has fallen further since December, hitting a fresh intraday low of CHF 2.42 on Friday, a day after the bank was forced to delay the release of its annual report after a last-minute call from the US Securities and Exchange Commission transacted on cash flow statements from the year 2019.

The bank described the SEC’s questions as technical in nature that did not impact its previously reported 2022 financial results.

Since taking over as Chairman of the Bank just over a year ago following the abrupt departure of his predecessor António Horta-Osório, Lehmann has overseen a restructuring of the executive team – including the replacement of the Chief Executive – developing the largest strategic restructuring into the 167- year history of the bank and a drop in the share price by more than 70 percent.