Egg on Credit Suisse’s face
So much for Credit Suisse’s (CS) savvy handling of the mortgage meltdown. The Swiss bank said Tuesday morning it will write down the value of some asset-backed structured credit trading positions by $2.85 billion, due to “significant adverse first quarter 2008 market developments.” Credit Suisse said it expects the writedown to shave $1 billion from its first-quarter earnings, though the bank says it believes it remains profitable for the period. Shares fell 4% in premarket trading in New York.
The announcement comes just a week after Credit Suisse posted a 72 percent decline in fourth quarter earnings that nonetheless made it look substantially sharper than rival UBS (UBS), which took some $14 billion in fourth-quarter writedowns tied to souring mortgage-backed securities. Credit Suisse said Tuesday that it continues to probe the problems in its asset-backed book, adding that the bank “has identified mismarkings and pricing errors by a small number of traders in certain positions in our Structured Credit Trading business.” Credit Suisse spokesman Marc Dosch said a “small number” of traders had been suspended, Bloomberg reported. Just another case of savvy risk management, no doubt.
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