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News - Credit Suisse Revaluations |
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Credit Suisse has issued a press statement confirming incorrect markings of certain assets in both 2007 and 2008 blaming trader misconduct. The Group also stated that it was unlikely to be profitable in the 1st Qtr 2008.
Zurich, March 20, 2008 Credit Suisse recorded a total valuation reduction of CHF 2.86 billion (USD 2.65 billion), of which CHF 1.18 billion is related to the fourth quarter of 2007, and CHF 1.68 billion to the first quarter of 2008. Net income for Credit Suisse for the fourth quarter and full-year 2007 has been revised by CHF 789 million to CHF 540 million, and CHF 7,760 million, respectively. Reflecting the good performance for 2007 and the strong capitalization with a year-end BIS tier 1 ratio of 11.1%, the proposal for a CHF 2.50 per share dividend to the shareholders' meeting remains unchanged. With regard to 2008, including these valuation reductions, Credit Suisse was profitable through the end of February. However, in light of the difficult market conditions in March, at this time, Credit Suisse believes it is unlikely to be profitable in the first quarter. Following its revaluation review, Credit Suisse has determined that the pricing errors were, in part, the result of intentional misconduct by a small number of traders. These employees have been terminated or have been suspended and are in the process of being disciplined under local employment law. The review also found that the controls put in place to prevent or detect this activity were not effective. The Executive Board of Credit Suisse will oversee a series of remedial actions:
- Reassignment of the trading responsibility for the CDO trading business and enhancement of related control processes.
- Improvement of the effectiveness of supervisory reviews and formalization of escalation procedures.
- Improvement of the coordination among trading, product control and risk management and addition of further resources.
- Improvement of training and enhancement of tools and other technical resources available to our employees. Brady Dougan, Chief Executive Officer of Credit Suisse Group, said: "This incident is unacceptable and it does not represent the high standard of Credit Suisse. Our overall control framework remains sound. We are taking strong action to remediate and move forward." Mr. Dougan added: "Credit Suisse continues to be well positioned through the challenging and volatile markets that have existed since the middle of 2007. We are one of the world's best capitalized banks, and our funding is conservative. Our Private Banking business continues to perform very well. Client momentum across our businesses is strong. We benefit from our diverse mix of businesses, our extensive global reach and our integrated banking model. I am confident in our ability to navigate current market conditions and deliver long-term value to our shareholders."
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Credit Suisse provides a range of financial services, including advisory services, underwriting, financing, market making, asset management, brokerage and retail banking on a global level.
Latest News
Press Release FY08 loss from continuing operations of CHF 7.7 billion; FY08 loss from continuing operations of CHF 7.1 billion excluding costs after tax from the accelerated implementation of the strategic plan. 4Q08 net loss of CHF 6.0 billion; 4Q08 loss from continuing operations of CHF 4.9 billion excluding costs after tax from the accelerated implementation of the strategic plan. Capital position remains very strong; tier 1 ratio of 13.3% as of end-2008; liquidity remained strong throughout the year. Private Banking remained solidly profitable and recorded net new assets of CHF 50.9 billion in FY08. In 4Q08, continued strong net... Readmore | Credit Suisse has reached an agreement on a consent decree with the Swiss Federal Banking Commission (SFBC) on capital targets and leverage requirements. Credit Suisse has raised tier 1 capital from a small group of major global investors, the largest participant being the Qatar Holding LLC, a wholly-owned subsidiary of the Qatar Investment Authority, through: Sale of approximately 93 million Credit Suisse Group treasury shares for proceeds of approximately CHF 3.2 billion of common equity; Issuance of mandatory convertible bonds convertible into approximately 50 million new shares of common equity for proceeds of approximately CHF 1.7 billion; Issuance of non-dilutive... Readmore | Confirmation of provisional 3Q08 results announced on October 16, 2008 Strong operating results and sustained asset inflows in Private Banking: net new assets of CHF 14.5 billion, with strong contributions from both Wealth Management and the Swiss Corporate & Retail Banking business Pre-tax loss of CHF 3.2 billion in Investment Banking, reflecting writedowns of CHF 2.4 billion in the leveraged finance and structured products businesses and exceptionally adverse trading conditions in SeptemberContinued reduction of risk exposures to assets most severely impacted by the dislocation in the mortgage and credit markets Solid results in some businesses in Investment Banking, including global... Readmore | Credit Suisse has reached an agreement on a consent decree with the Swiss Federal Banking Commission (SFBC) on capital targets and leverage requirements. Credit Suisse has raised tier 1 capital from a small group of major global investors, the largest participant being the Qatar Holding LLC, a wholly-owned subsidiary of the Qatar Investment Authority, through: Sale of approximately 93 million Credit Suisse Group treasury shares for proceeds of approximately CHF 3.2 billion of common equity; Issuance of mandatory convertible bonds convertible into approximately 50 million new shares of common equity for proceeds of approximately CHF 1.7 billion; Issuance of non-dilutive... Readmore | Credit Suisse has issued a press statement confirming incorrect markings of certain assets in both 2007 and 2008 blaming trader misconduct. The Group also stated that it was unlikely to be profitable in the 1st Qtr 2008. Readmore | | Show options |
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Recent Events -Credit Suisse
72% Drop in Fourth Quarter Earnings Credit Suisse has announced a 72% fall in quarterly profits. Net profit in the fourth quarter of 2007 was SFr1.33 billion (£619 million), slightly worse than market expectations. Losses on sub-prime investments were SFr2 billion in 2007 - less than it anticipated. The banking giant has been relatively unhurt by the sub-prime mortgage crisis. However, in spite of a weak trading environment, investment banking remained profitable in the 3 months to December with pre-tax earnings of SFr328 million, down 86% year-on-year. Earnings before tax for the full year fell 19% to SFr4.83 billion. Job Losses In January 2007, the bank announced it was to shed some 500 jobs within its bond trading unit as a result of a slowdown in earnings in the sector from the sub-prime mortgage crisis. Forward View Brady Dougan, chief executive, commended the bank’s strong foundation for 2008, its good business and geographical mix and its strong risk management capabilities. He added these strengths make me confident in our ability to deliver a superior performance over market cycles. He added that he believed Credit Suisse’s level of transparency and disclosure was now “by far the most complete and transparent” in the business. However, less than two weeks after the results announcement the bomb dropped…
Re-pricing of certain asset-backed positions Further to its commitment to provide transparency, Credit Suisse today announced that in connection with the operation of ongoing control processes, it has undertaken an internal review that has resulted in the re-pricing of certain asset-backed positions in its Structured Credit Trading business within Investment Banking. The current total fair value reductions of these positions, which reflect significant adverse first quarter 2008 market developments, are estimated at approximately USD 2.85 billion (having an estimated net income impact of approximately USD 1.0 billion). In the first quarter to date, we estimate we remain profitable after giving effect to these reductions. The final determination of these reductions will depend on further results of our review and continuing market developments. We will also assess whether any portion of these reductions could affect 2007 results. Finally, our internal review, which has identified mismarkings and pricing errors by a small number of traders in certain positions in our Structured Credit Trading business, is continuing.
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