Not since 2003 has Credit Suisse (NYSE: CS) sustained a quarterly loss. Unfortunately, it looks like the streak will end in fiscal Q1.
True, no investment firm seems to be immune from the problems of the credit crunch. In fact, it looks like March has been particularly tough.
However, in the case of Credit Suisse, it looks like some of the damage has been self inflicted. For example, a variety of employees engaged in mispricing of collateralized debt obligations (CDOs). As a result, Credit Suisse expects to take a 2.65 billion franc write down.
No doubt, the employees have been terminated and are being disciplined. And yes, shenanigans have been big problems at other banks, such as Societe Generale SA and MF Global Inc. (NYSE: MF).
Yet, the damage has been done – and, once again, investors have to worry about the risk-management capabilities of Credit Suisse.
In today's trading, the stock price is down 5.22% to $47.25.
Tom Taulli is the author of various books, including The Complete M&A Handbook
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Reader Comments (Page 1 of 1)
3-20-2008 @ 6:14PM
NewsVisual said...
Because news reports say that Credit Suisse Group will probably post losses for this fiscal quarter, nervous investors are bound to wonder whether it will succumb to the same dire fate as The Bear Stearns Companies Inc, which narrowly averted bankruptcy by accepting a buyout deal from JPMorgan Chase & Co this past Sunday. The Zurich-based company said today it will write down $2.65 billion over the fourth quarter of 2007 and the first three months of 2008, reported Bloomberg News in an online article on Thursday. Whatever the true extent of Credit Suisse’s financial difficulties might be, there can be little doubt that its current circumstances will require its leadership to make sound decisions in the coming months in order to ensure that it returns to fiscal health.