CREDIT SUISSE TRADERS UNDER INVESTIGATION
LONDON - Swiss investment bank Credit Suisse has suspended a number of traders suspected of inflating the value of mortgage-backed bonds and causing a surprise writedown of £1.5 billion ($2.85 billion). The bank said it discovered the discrepancy after an ad hoc audit of its structured credit division. The London traders involved were working under Kareem Serageldin, the bank's global head of synthetic collateralised debt obligations (CDOs).
The loss, which the bank blamed on pricing errors and adverse market conditions, is expected to cut $1 billion from its first quarter profits. The bank's staff will help foot the bill, as Credit Suisse expects to recoup some of the costs through cutting pay and bonuses.
Credit Suisse said the loss was isolated, but that its reaction would include a general tightening of risk controls. The bank refused to comment over whether the incident has affected relations with its recent backer the Qatari Investment Authority sovereign wealth fund.
Rating agency Standard & Poor's says it is considering lowering Credit Suisse's rating. The investigation continues.
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