Owen Walker reports for the Financial Times that Credit Suisse has announced: “’material weaknesses’ in its internal controls over financial reporting.” Walker writes:
Credit Suisse said it had identified “material weaknesses” in its internal controls over financial reporting, the latest blow to a bank battling to revive its fortunes.
In its annual report on Tuesday, Credit Suisse said “management did not design and maintain an effective risk assessment process to identify and analyse the risk of material misstatements in its financial statements”.
The bank said its full-year 2022 results, when it reported its biggest annual loss since the financial crisis, were unaffected.
Credit Suisse had been forced to push back the publication of the annual report from last week after receiving a last-minute call from the US Securities and Exchange Commission relating to cash flow statements going back three years, which it described as “technical”.
Chief executive Ulrich Körner said at the Morgan Stanley European Financials conference on Tuesday that the feedback from the SEC was part of “longer dialogue” between the two parties over the issue.
“We are, as you would expect from us, addressing very forcefully with the appropriate actions,” he added.
The findings come at a difficult juncture for the bank that has lurched from crisis to crisis in recent years, resulting in heavy losses. Its share price fell 4 per cent in early trading on Tuesday to SFr2.166, leaving it down more than 20 per cent this year and more than 80 per cent over the past two years.
The spread on five-year Credit Suisse credit default swaps hit a record 522 basis points on Tuesday, having previously spiked at 350 bps in October.
Much of the recent rise in Credit Suisse CDS spreads — which indicate investor bearishness — happened earlier in the week, as fears of contagion from the collapse of US lender Silicon Valley Bank spread to European companies.
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