Credit Suisse warned today that difficult market conditions in March would likely force the company to report a first quarter loss.
The Swiss banking giant noted that it was profitable through February, but had to revalue certain asset-backed securities in its CDO trading business after the market turned earlier this month.
The total write-down stood at $2.82 billion, including $1.16 billion related to the fourth quarter of 2007 and $1.66 billion tied to the current quarter.
The company blamed the pricing errors partially on intentional misconduct by a small number of traders, who have subsequently been suspended or terminated and dealt with according to local employment law.
“This incident is unacceptable and it does not represent the high standard of Credit Suisse,” said Brady Dougan, Chief Executive Officer of Credit Suisse Group, in a statement. “Our overall control framework remains sound. We are taking strong action to remediate and move forward.”
Credit Suisse said it plans to revamp its trading business by improving control processes, supervision, training, coordination, and risk management.
“Credit Suisse continues to be well positioned through the challenging and volatile markets that have existed since the middle of 2007, Mr. Dougan added. “We are one of the world’s best capitalized banks, and our funding is conservative.”
“Our Private Banking business continues to perform very well. Client momentum across our businesses is strong. We benefit from our diverse mix of businesses, our extensive global reach and our integrated banking model. I am confident in our ability to navigate current market conditions and deliver long-term value to our shareholders.”
Despite the bad news, which cut the bank’s bottom line for 2007 by $799 million, the company said it still plans to pay out its $2.47 per-share dividend to shareholders.
Shares of Credit Suisse fell $2.52, or 5.06%, to $47.33 in late morning trading on Wall Street, hovering near their 52-week low.