It was never going to be positive. Credit Suisse on Thursday said it had completed the internal review begun last month when the bank shocked investors when it revealed “pricing errors” in structured credit and suspended a number of traders, along with its global head of CDOs, Kareem Serageldin.
The result? The previously-announced “value reduction” across Q4 2007 and Q1 2008 has been shaved slightly to SFr2.86bn, but CS now says trading in March has been so tough it does not expect to post a first quarter profit.
What’s more, the bank has now decided that these pricing errors were not errors at all, but “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.
An internal process overhaul is promised and CS was at pains to stress that it remains well capitalised.
The bank’s embarrassment has been compounded by the fact February’s news of CDO writedowns came just one week after its 2007 results announcement.
Related links:
Credit Suisse annual report
FT Alphaville – Now, about those CS numbers last week…