Swiss banking giant Credit Suisse took another hit to earnings today on its exposure to the US sub-prime loan crisis and warned there could be no profit in this year's first quarter.
Credit Suisse, revising figures released in February, reduced its 2007 net profit to 7.76 billion Swiss francs (€5 billion) due to the sub-prime loan collapse. That gave a 6% decrease, as opposed to the 3% increase when it posted a net profit of 8.55 billion Swiss francs for 2007 last month.
At that time, the bank had sought to reassure investors it had largely weathered the collapse in the US property market after making huge write-downs on its exposure to the sub-prime or higher risk mortgage sector.
Credit Suisse said today that 'because of difficult market conditions in March ... it is unlikely that the company will be profitable in the first quarter.'
The bank also confirmed that price fixing errors discovered in its structured credit business were partly caused 'by a small number of traders' who had since been suspended or dismissed.
Controls put in place to prevent or detect this activity had proved ineffective, it added.
A source at the bank said this should not be seen as in any way similar to the massive rogue trading scandal at French bank Société Générale which in January had to take a hit of €4.9 billion as a result.
Bank CEO Brady Dougan said the incident was 'unacceptable and does not meet the standards' required by the bank.
'Credit Suisse continues to be well positioned through the challenging and volatile markets that have existed since the middle of 2007. Our private banking business continues to perform well,' Dougan added.
