These revelations come just days after the bank announced a less than expected Sfr1.3 billion writedown on leveraged finance and structured debt and mortgage investments in the fourth quarter of 2007, signalling that it had managed to ride the wave of the credit crisis better than most of its competitors. The latest writedowns will cut the 2008 first-quarter profits by about $1 billion. The bank is still assessing the impact of these reductions on the 2007 results.
Banks continue to lose billions of dollars due to writedowns on assets exposed to US subprime debt. Losses of more than $145 billion have so far been reported, with estimates running as high as $400 billion.
The Financial Stability Forum (FSF), a committee of international bank regulators and finance ministries, recently called for the strengthening of the financial sector's risk management practices. In interim recommendations to the G-7, released on February 5, “to rebuild confidence in the creditworthiness and robustness of financial institutions”, the FSF said “this involves not only assessing firms’ risk management capacity but also the extent to which firms integrate their risk assessments into their overall decision making processes and controls”.
Credit Suisse has since suspended the traders involved in the mispricing, pending the review.