Credit Suisse issues profit warning
Credit Suisse today warned it is unlikely to make a profit in the first three months of this year and said staff had been sacked due to rogue trading.
Switzerland’s second-largest bank said it was continuing to face “difficult market conditions” after completing a review of investments hit by the credit crunch.
The announcement comes after Credit Suisse last month revealed pricing errors by some of its traders had forced it to slash the value of its investments by 2.88bn Swiss francs (€1.8bn).
The company today revised the figure down to 2.86bn francs (€1.83bn), but it cut its full-year net profit figure for 2007 to 7.76bn Swiss francs (€9.94bn), 6% lower than the total reported last month.
The bank warned on current trading, saying it was profitable to the end of February but had been hit by fresh market problems this month.
Credit Suisse confirmed it had been suffered “intentional misconduct” by a small number of traders and added the employees, who are thought to have inflated the price of US mortgage bond investments, had either been sacked or suspended.
The company found that internal controls to detect or prevent misconduct had failed and unveiled a series of measures to offer increased protection.
Brady Dougan, chief executive, said: “This incident is unacceptable and does not represent the high standard of Credit Suisse.”
Shares in the company dived more than 8% in trading on the Zurich Stock Exchange. The bank has until now been profitable despite the crisis in financial markets.
The announcement is the latest blow to the global investment banking sector, which has been rocked by the credit crunch sparked by rising defaults in the US sub-prime mortgage sector.
Investment houses in both Europe and the US have been forced to write down billions of dollars worth of assets linked to the ailing US mortgage sector.
The crisis claimed its biggest victim this month as JP Morgan Chase was forced to mount a cut-price rescue of Wall Street rival Bear Stearns, which had been unable to secure market funding to continue trading.
