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Swiss banks see huge withdrawals in 2008

  Swiss banks lost more than a quarter of their deposits last year as customers withdrew some CHF 1.41 trillion ($1.21 trillion) amid the global financial crisis, heavy losses at UBS AG and Credit Suisse Group, and ongoing investigations into the offshore banking industry.

Figures released by the Swiss National Bank on Monday show deposits fell 27% to CHF 3.82 trillion, their lowest since August 2005.

Foreign customers took out CHF 882 billion more than they put in, while domestic net withdrawals reached CHF 531 billion, according to the SNB’s monthly statistical bulletin.

Foreign private customers withdrew the highest proportion of their money _ 36% or CHF 371 billion, leaving only 671 billion in Swiss vaults. That is the lowest amount deposited by foreign private customers since the end of 1998.

Deposits by foreign institutional customers dropped 23%, or about CHF 417 billion, to CHF 1,386 billion. Domestic private customers withdrew 28% of their deposits, leaving CHF 417 billion.

The report didn’t break the figures down by institution, but Switzerland’s two flagship banks have both said their customers withdrew billions of francs last year.

UBS said net withdrawals reached CHF 226 billion in 2008, compared with inflows of CHF 140.6 billion the previous year. The bank posted a full-year loss of CHF 19.7 billion earlier this month, the biggest in Swiss corporate history.

A high-profile court battle in the United States over UBS’s cross-border business also has harmed its image in the eyes of foreign customers. The case has become the focus of US Senate hearings on offshore tax evasion. UBS shares dropped 9.1% Monday to reach an all-time low of CHF 10.

Credit Suisse, too, reported withdrawals in the tens of billions of francs, and full-year net losses of CHF 8.2 billion for 2008. (The Economic Times)