Credit Suisse faces tough questions after $1 billion write-downs

Mon Apr 11, 2016 2:26am EDT
 
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(This version of the April 4th story fixes spelling of analyst name in 13th paragraph)

By Joshua Franklin

ZURICH (Reuters) - On Jan. 19, Credit Suisse (CSGN.S: Quote) Chief Executive Tidjane Thiam contacted the head of the Swiss bank's markets business asking for more details about the fourth-quarter results at the trading division, according to materials seen by Reuters.

Two-and-a-half months and nearly $1 billion in write-downs later, investors, analysts and former board members are questioning why Thiam and his finance chief, David Mathers, were caught out by the scale of the division's illiquid trades -- positions that are not easy to sell out of.

The write-downs have compounded for Credit Suisse what has already been a tough start to 2016 for all investment banks, with its share price down around 38 percent so far this year, one of the biggest slides of all large European lenders.

In January, Thiam, by then just over six months into his job as CEO of Switzerland's second-biggest bank, wondered whether Credit Suisse had gone too big on some trades and addressed the issue with another top executive.

"I wonder about the absolute size of our inventory in a number of activities," he told Global Markets head Tim O'Hara on Jan. 25, according to the materials shown to Reuters on condition that no further details would be disclosed.

"You and I need to discuss case by case the appropriate inventory levels," Thiam said.

Thiam has said he and other senior bank officials were unaware of the size of the positions behind the write-downs but that no trading limits had been breached or trades concealed.   Continued...

 
CEO Tidjane Thiam of Swiss bank Credit Suisse addresses a media briefing in Zurich, Switzerland in this October 21, 2015 file photo. REUTERS/Arnd Wiegmann/Files