Switzerland's second largest bank won shareholder approval for a capital increase but its business is still bleeding.

Credit Suisse expects a pretax loss of up to 1.5 billion Swiss francs ($1.58 billion) in its fourth quarter as it keeps bleeding cash, the Swiss bank said on Wednesday, shortly before shareholders approved a $4 billion capital hike.

The bank said a “challenging” economic and market environment had hurt client activity, while cash outflows across the business had increased at the start of its fourth quarter.

The profit warning is the latest setback for the embattled lender which had previously forecast a net loss for the last three months of the year but did not give a figure.

The bank also gave a sobering assessment of the scale of its problems, which have been exacerbated by clients withdrawing savings and investments.

The bank said that there had been an outflow equivalent to 6% of assets managed by the group at the end of the third quarter. It said this trend in the wealth management division, catering to rich clients, has since improved, but had yet to reverse.

As a result, the bank was forced to dip into liquidity buffers, slipping below certain minimum regulatory requirements although it said its core liquidity and funding requirements had been held.

Credit Suiss (CS)e held an extraordinary general meeting Wednesday, winning approval for the capital increase to fund a recovery from the biggest crisis in its 166-year history.

The bank has been battered by a string of scandals and losses, including a $5.5 billion loss from the unraveling of US investment firm Archegos. It also had to freeze $10 billion worth of supply chain finance funds linked to insolvent British financier Greensill.

“The Investment Bank has been impacted by the substantial industry-wide slowdown in capital markets and reduced activity in the Sales & Trading businesses, exacerbating normal seasonal declines, and the group’s relative underperformance,” Switzerland’s second largest bank said.

“Credit Suisse would expect the Investment Bank and the Group to report a substantial loss before taxes in the fourth quarter 2022, of up to … 1.5 billion [Swiss francs] for the Group.”

This follows a third quarter pretax loss of 342 million francs and a 1.94 billion franc loss so far this year.

Client activity had remained subdued in the wealth management and Swiss Bank divisions, a situation expected to continue in the coming months, the bank said.

Analysts expressed concern about the outflows, which Bank Vontobel estimated to be around 84 billion Swiss francs ($88.2 billion).

“The massive net outflows in Wealth Management, CS’s core business alongside the Swiss Bank, are deeply concerning — even more so as they have not yet reversed,” said Vontobel analyst Andreas Venditti. “CS needs to restore trust as fast as possible — but that is easier said than done.”

In wealth management, outflows had reduced “substantially” from the high levels of the first two weeks of October and were around 10% of assets under management at the end of the third quarter of 2022, Credit Suisse said.

The cost of insuring the debt of Credit Suisse against default rose and its bonds came came under pressure after the announcement, which stripped as much as 6% off the value of its shares, which have lost almost 60% so far this year.

Credit Suisse also highlighted its efforts to improve its balance sheet and reduce risk, including bond sales which raised $5 billion and selling part of its Securitized Products Group.

At the end of October, Credit Suisse unveiled a plan to cut thousands of jobs and shift its focus away from investment banking and towards less turbulent wealth management.

It said it was also making progress towards its goal of reducing costs by 15% by 2025, including cutting expenditure by around 1.2 billion francs by the end of 2023.

“The Group continues to execute on the decisive strategic actions detailed on October 27, 2022, to create a simpler, more focused and more stable bank,” it said.