Well, I don’t think it will be 10% any more. We mentioned operational risks, that came down a tad in the quarter. It came down by 1 billion francs from 46 billion francs to 45 billion francs. But at 45 billion francs, that’s still got quite some way to fall, over time, difficult to predict when it happens.
And then there’s our legacy book, where last time we said there were risk assets of a variety of – mostly credit risk assets, attaching to that book of the order of magnitude of 50 billion francs or so. And then this extraordinary event in the student loan ARCs, where 7 billion francs of the 22 billion francs gross amount of exposure to student loan ARCs was downgraded by Moody’s to the extent that we were required to take those out of risk weighted assets and deduct them in proportional amounts from capital.
That led to a reasonable deduction from that back book. But the back book has still got on the order of 30 billion francs or so to go. So that will come off over time. There’s operational risk to come down, but the market risk, I think, will go up. Well, it will go up, sure it will.
Fiona Swaffield – Execution
Thanks.
Operator
The next question is from Mr. Kian Abouhossein, JP Morgan. Please go ahead, sir.
Kian Abouhossein – JPMorgan
Yes. Hi.
John Cryan
Hi, Kian.
Kian Abouhossein – JPMorgan
I was wondering if you could go a little bit more through the net outflows, the 37 billion francs. And just business by business, describe what is really driven by your restructuring and what is really driven by really clients leaving and it may be a little bit subjectively, what the issues are around these outflows, if that’s possible?
John Cryan
Yes. That’s a better question for two weeks time, I have to say because then you’ll have the management team of that division on hand to take you through it in more detail. But essentially, what happened, the 37 billion francs is the just the aggregate of the three divisions’ totals.
And it’s a little unfair to aggregate like that because to understand the nature of the outflows, you have to look at asset management quite separately. Because if asset management’s net outflows are 10 billion francs, 13.5 billion francs or so were attributable to the wealth management channels and predominantly Wealth Management and Swiss Bank. So it actually had net inflows which were nearly all to do with the fact that its investment performance now, for some quarters, has been very strong and continues to be strong. And there’s always the lag effect of attracting institutional money.
Now, if you take the other two divisions, the easier one to understand is Wealth Management Americas. And essentially the driver there of 10 billion francs net outflows was the fact that we basically didn’t really hire anybody in the quarter and we had some turnover. We sold some business, some branches to Stifel Nicolaus and therefore we saw financial advisors leaving us and we didn’t really replace them. And with that business model, when financial advisors leave, they generally take a lot of their client assets with them. The situation in Wealth Management and Swiss Bank is different. This time for Swiss clients we saw outflows of just under 4 billion francs, whereas it had been basically flat in Q2.
Now, as I said earlier on the call, I think the variability of 3 billion francs or 4 billion francs per quarter for Swiss clients is not unusual. It’s probably obtained for several years. And it’s probably, therefore, a reflection of Q2’s strengths, rather than a particular weakness in Q3. So I would have thought, although Q3 might be slightly higher than we’d expect, somewhere between 0 and 4 billion francs is what you could expect from the Swiss clients at the moment, until we – I think until we return to profitability.
In the international markets, there are all sorts of factors. The principle one of which, of course, is that we are compelled and we’ve compelled ourselves to exit a business whereby we bank U.S. taxpayers cross border, other than in SEC regulated entities. And as a consequence, we are imposing outflows on the bank. Now with a heightened scrutiny of governments around the world on tax matters and given our role center stage in that in the earlier part of the quarter, before the John Doe summons were settled, I think we were disproportionately affected.
I do think reputational issues still weigh on us a bit and that particularly weighs on the morale of our client advisors. And their ranks have also been reducing, both voluntarily and involuntarily. So, I think until we get stability in our ranks, we return to profitability, which I think is crucially important, then it will be difficult for us to categorically state that we were confident, we could turn around the situation.
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