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Credit Suisse crashes to record low as it warns of 'material weaknesses'

Call for calm: Credit Suisse chief executive Ulrich Koerne called on investors to be patient during an appearance on Bloomberg TV

Credit Suisse slumps to record low as it warns of ‘significant weaknesses’ in financial reports

Crisis-ridden Credit Suisse hit an all-time high warning of “significant weaknesses” in its financial reporting.

The alarm was raised yesterday as the banking giant was caught up in a global sale of banking shares.

The disclosure rocked investors already worried about Credit Suisse’s prospects after the collapse of Silicon Valley Bank (SVB) in the United States, the biggest such failure since the 2008 crisis.

Call for calm: Credit Suisse chief executive Ulrich Koerne called on investors to be patient during an appearance on Bloomberg TV

Call for calm: Credit Suisse chief executive Ulrich Koerne called on investors to be patient during an appearance on Bloomberg TV

Shares fell 6% to a historic low and although they later rallied amid a rebound on Wall Street, the scandal-hit lender’s value is 97% below its peak in 2007.

The cost of insuring against a Credit Suisse default has also hit an all-time high. Such was the anxiety over the latest development that the bank felt compelled to post a tweet confirming that the annual results released last month remained “accurate and reliable”.

Credit Suisse had already been caught up in the turmoil in the global banking sector after SVB, the 16th-largest US bank, disappeared, followed by that of Signature Bank in New York over the weekend.

Regulators have scrambled to contain the fallout. But fears grew earlier this week about the health of the broader sector, with European lenders not immune and already weakened companies such as Credit Suisse looking particularly vulnerable.

It even prompted Rich Dad Poor Dad author Robert Kiyosaki, a prominent investor who previously predicted the demise of Lehman Brothers in 2008, to suggest the Swiss lender would be “the next bank to go”.

The publication of the bank’s annual report – already delayed last week following a request from US stock exchange authorities – proved the catalyst for renewed nervousness yesterday.

He revealed the company had identified “certain material weaknesses in our internal control over financial reporting” for 2022 and 2021.

The report also revealed that customers were still withdrawing funds even after reporting staggering £99billion outflows in the fourth quarter of last year.

“These outflows stabilized at much lower levels but had not yet reversed as of the date of this report,” he said.

Swiss regulator Finma said on Monday it was seeking to identify contagion risks for the country’s banks and insurers stemming from the US crisis.

Credit Suisse chief executive Ulrich Koerner appealed to investors for patience during an appearance on Bloomberg TV – and sought to downplay the fallout from SVB.

“The SVB is a very recent thing that happened over the weekend and yesterday,” he said. “So far it’s been pretty quiet.

‘SVB is a very different situation. We follow materially different and higher standards for capital, funding, liquidity, etc.

Koerner admitted that “no one is happy with how the stock price has moved,” but said the bank was ahead of some steps in its turnaround plan.

“We said it was a three-year transformation and you can’t come after two months ‘Why isn’t everything done? “, Did he declare.

Russ Mould, chief investment officer at AJ Bell, said: “While the immediate fallout from the SVB collapse may have been contained for now, nervousness around the banking sector is not helped by the latest revelations. of Credit Suisse.”

Last month, Credit Suisse reported an annual loss of £6.5bn for 2022. It has faced a series of scandals over the past two years, including multi-billion pound stunts linked to the collapse of US investment firm Archegos and supply chain finance firm Greensill. Capital.

The bank was also convicted in a money laundering case in Switzerland and at the end of last year a frenzy of speculation about its financial health shook confidence.

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