Credit Suisse woes mount as shares fall on discovery of ‘material weaknesses’ in financial reporting controls
Credit Suisse’s shares continued to slide after it found “material weaknesses” in its financial reporting controls as it released its delayed annual report.
The bank’s shares were trading 4.4 per cent lower on Tuesday morning at just CHF2.16.
The embattled lender said its “internal control over financial reporting was not effective” for both 2021 and 2022. It confirmed that its results were unaffected by the problems in reporting.
It said it was developing a “remediation plan to address the material weaknesses”. This includes strengthening its risk and control frameworks.
The bank said that it might have to “expend significant resources to correct the material weaknesses”.
However, it warned “there can be no assurance that these measures will remediate the material weaknesses in our internal control over financial reporting or that additional material weaknesses in our internal control over financial reporting will not be identified in the future”.
The report published today was delayed last week following a call from the US Securities and Exchange Commission the evening before the report was expected to be published.
The bank had revised how it filed a series of cash flows, including share-based payments and foreign exchange hedges in its 2021 report.
The news comes as the embattled lender seeks to recover from a “horrifying” 2022 facing scandals, talent outflows and even speculation that it might collapse in October.
In the fourth quarter of last year it reported outflows of CHF110.5m. Around two thirds of the net outflows in the quarter were concentrated in October.
In its , the bank said that outflows stabilised to much lower levels but “had not yet reversed” by year-end.
Credit Suisse also released details of its remuneration policy. The executive board collectively waived its bonuses for the first time since the financial crisis.
Chair Axel Lehmann proposed to voluntarily waive his chair fee of CHF1.5m “given the poor financial performance in 2022 and challenging situation”.
In a statement Lehmann and CEO Ulrich Koerner said 2022 “marked a decisive break from the past and the beginning of our journey to become a simpler, more focused bank built around the needs of our clients…The transformation we announced and started in 2022 is fully underway.”