Home Business Credit Suisse shares sink 5% as ‘weaknesses’ found in financial reporting

Credit Suisse shares sink 5% as ‘weaknesses’ found in financial reporting

by delta
0 comment

Credit Suisse Group logo in Davos, Switzerland, Monday 16 January 2023. Getty Images

The stock fell 5% in early trading Tuesday to a record low after the bank said it had found “significant weaknesses” in its financial reporting processes for 2022 and 2021. The stock has suffered a slight loss since then, but remains down more than 4% by 9:30 am London time.

In its annual report on Tuesday, Credit Suisse revealed it had identified “significant weaknesses in internal controls over financial reporting” for 2021 and 2022.

These issues relate to “failure to design and maintain an effective risk assessment process to identify and analyze risks of material misstatement” and various deficiencies in internal controls and communications. Nevertheless, the bank said it was able to confirm that its financial statements for the years in question were “pretty accurate in all material respects”.

Credit Suisse also said net worth outflows had declined but “haven’t recovered yet.” The bank confirmed its 2022 results announced on February 9, showing a net loss of CHF 7.3 billion ($8 billion) for the full year.

Liquidity risk

In the second half of 2022, the bank revealed a “significant increase in cash deposit withdrawals, non-renewal of maturing term deposits, and net worth outflows at levels well in excess of what occurred in the third quarter of 2022. Credit Suisse saw client withdrawals of over CHF 110 billion in the fourth quarter as a series of scandals, legacy risks and compliance failures continued to plague the company.

“These outflows have stabilized at much lower levels, but have not yet reversed as of the date of this report. and fell below certain legal entity-level regulatory requirements.”

Credit Suisse has acknowledged that these conditions “have exacerbated and may exacerbate” liquidity risk. A reduction in assets under management is expected to result in lower net interest income, lower recurring fees and charges, which in turn impacts the bank’s capital position objectives.

“The failure to reverse these outflows and recover assets under management and deposits could have a material adverse effect on our operating results and financial condition,” the report said. Credit Suisse has reiterated that it has taken “decisive action” on legacy issues as part of its major ongoing strategic review, but expects further “substantial” financial losses in 2023.  According to the annual report, the bank’s board of directors will receive a bonus for the first time in over 15 years, with a combined fixed compensation of CHF 32.2 million.

You may also like

Leave a Comment


Delta-Compliance.com is a premier news website that provides in-depth coverage of the latest developments in finance, startups, compliance, business, science, and job markets.

Editors' Picks

Latest Posts

This Website is operated by the Company DELTA Data Protection & Compliance, Inc., located in Lewes, DE 19958, Delaware, USA.
All feedback, comments, notices of copyright infringement claims or requests for technical support, and other communications relating to this website should be directed to: info@delta-compliance.com. The imprint also applies to the social media profiles of DELTA Data Protection & Compliance.

Copyright ©️ 2023  Delta Compliance. All Rights Reserved

Newsletter Signup

Subscribe to our weekly newsletter below and never miss the latest product or an exclusive offer.