1.04 PM Thursday, 25 April 2024
  • City Fajr Shuruq Duhr Asr Magrib Isha
  • Dubai 04:26 05:44 12:20 15:47 18:50 20:08
25 April 2024

Credit Suisse writes down $2.85 bn

By Agencies


Credit Suisse said it marked down the value of asset-backed investments by $2.85 billion, wiping $1 billion from its net income and sending its shares plummeting.

The bank said it still expected to stay in profit in the first quarter of 2008 despite the charge.

The write-down was the latest in a string of shock announcements by global banks and follows revelations of huge new subprime-related exposures at rival UBS and a trading scandal exposed last month at Societe Generale. The charges reflected "significant adverse first quarter 2008 market developments," Credit Suisse said in a statement on Tuesday, sending its shares sharply lower.

Trading in Credit Suisse shares fell over 7 per cent in early trading.

The bank said an internal review, which identified mismarkings and pricing errors by a small number of traders in its Structured Credit Trading business, was continuing.

A spokesman for Credit Suisse said he was unable to quantify the impact of the errors and mismarkings on the size of the write-downs.

Analysts said they were stunned by the announcement by Credit Suisse, which until now had been practically unblemished by the subprime debacle.

Credit Suisse also said it was assessing whether any portion of the markdowns could affect its 2007 results.

The shock announcement was a heavy blow for Credit Suisse which only last week had trimmed its full-year write-downs for 2007.

Unlike its chief Swiss rival UBS -- which has been hit by $18 billion of charges -- and some major U.S. banks such as Citigroup and Merrill Lynch, Credit Suisse had until now been relatively unscathed by the credit crisis.

The bank estimates it remained profitable in the first quarter to date, and the final determination of the reductions will depend on further results of its review and market conditions.

"We will also assess whether any portion of these reductions could affect 2007 results," CS said in a statement.

The latest announcement was triggered by disclosure requirements relating to the listing of a $2 billion bond by Credit Suisse which closed on February 19. (Reuters)