Credit Suisse Froze Assets Worth $10.6 Billion in Q1 2022

Credit Suisse, which is the second-largest bank in Switzerland, said on Thursday that it froze CHF 10.4 billion of wealthy clients’ assets in the first quarter of 2022 under sanctions imposed in connection with Russia’s invasion of Ukraine.

“In Q1 2022, CHF 10.4 billion of assets under management were reclassified to assets under custody due to the imposed sanctions,” Credit Suisse commented, via Reuters. The bank’s financial report stated that the freezing of assets due to sanctions had an impact of CHF 10.4 billion on its wealth management assets.

Moreover, less than 4% of the assets under management at the bank’s wealth management businesses are managed by Russians. Earlier this week, Credit Suisse reported a CHF 273 million net loss for the first quarter, dented by litigation provisions of 703 million francs and related losses of CHF 206 million.

According to a financial report published on Thursday, in wealth management, gross impaired loans rose by CHF 230 million from end-2021. “The increase in impaired loans included adverse impacts from Russia’s invasion of Ukraine and related sanctions. We closely monitor the risk management implications of these developments on our lombard loan portfolio in China, our trading and lending book exposures to Chinese local government- and state-owned enterprises as well as the accelerating default trend in the onshore corporate debt market,” the bank highlighted.

In addition, the bank highlighted China’s strict COVID-19 lockdowns, which have further intensified concerns about disruptions to global supply chains and inflationary pressures.

Q1 2022 Expectations

Recently, Credit Suisse revealed that it was expecting negative impacts on its first-quarter earnings due to the impact of its business in Russia and several litigation provisions. As a result, the Zurich-headquartered bank stopped pursuing new business in Russia in late March and started efforts to cut its exposure in the country. It earlier said that it had around $914 million exposure in Russia, calling it 'not significant'.

But, increasing litigation cost is a massive concern for the Swiss bank. The total litigation provisions of the bank for the quarter could be approximately CHF 700 million, adding around CHF 600 million, mostly from the previously disclosed legal matters that originated more than a decade ago.