NEWS | Wednesday, 20 February 2008

Credit Suisse traders err

Bank loses $1 billion

Less than a week after analysts praised Credit Suisse for quality in risk management practices, the banking giant Tuesday announced the suspension of a handful of traders for pricing errors contributing to a $1 billion cut from its profit.
“It’s a blow to confidence,” said Swiss equity analyst Andreas Venditti. “It looked like they had done such a good job in risk management. Today, of course, that looks quite different.”
It was also noted, however, that although total write-downs for Credit Suisse almost reached the $3.7 billion mark due to the worldwide credit crisis, Credit Suisse’s biggest rival in Zurich, UBS, has written off a staggering $18 billion.
Although reaching expected goals in terms of registered profit, UK’s Barclays Bank also reported a write-down, in this case of $3.1 billion.
In the international media, it was also reported that the Qatar government bought shares into Credit Suisse last Monday, without making a public statement to quantify how much has been bought. According to Swiss law however, companies are only allowed not to disclose shareholding purchase once a three percent threshold of shares is not exceeded.
UBS and Merrill Lynch, among other global banks have recently had no other option but to inject new funds from big sovereign wealth funds to keep their capital above regulatory minimums.