Do big brokerages downgrade themselves? This one makes it look like it just did
On Monday, Credit Suisse shares plunged more than 14 per cent to hit a record low amid turmoil across banking shares around the globe following the sudden collapse of US-based lenders Silicon Valley Bank (SVB) and Signature Bank.
In its 2022 annual report released on Tuesday, Credit Suisse – a global investment bank and financial services company acknowledged financial weakness. The annual report comes after Credit Suisse – one of the world's largest investment banks – was forced to delay its release last week after the US market regulator, the US Securities and Exchange Commission, flagged its previous financial statements.
Credit Suisse shares have been in a tailspin in the recent past, having shed more than two-thirds of their value in the last one year. In February 2023 alone, Credit Suisse stock fell 21 per cent.
Analysts say concerns about the company's financial health following a string of scandals and bad hedge fund calls have mainly led to the slide in its shares.
What does the Credit Suisse annual report for 2022 suggest?
According to the annual document, Credit Suisse identified "material weaknesses" in its internal controls over financial reporting, and said it had not yet stemmed customer outflows.
As of December 31, 2022, the Credit Suisse annual report said, the group’s internal control over financial reporting was not effective.
The management has reassessed and reached the same conclusion regarding the previous year, it added.
The investment bank's annual report showcases the difference between actual and estimated results. Besides, there have also been irregularities between assets, liabilities, debt, and provisioning.
PwC, the auditors of the report, included an adverse opinion on the effectiveness of the bank’s internal controls.
The delayed report comes after the US regulator raised concerns about certain previous revisions to its consolidated cash flow statements for 2019 and 2020.
What is ailing Credit Suisse?
Credit Suisse's management has time and again tried to soothe the nerves of investors and clients alike about its financial health.
Credit Suisse share price: How the market views the financial services firm
On Monday, Credit Suisse shares plunged more than 14 per cent to hit a record low amid turmoil across banking shares around the globe following the sudden collapse of US-based lenders Silicon Valley Bank (SVB) and Signature Bank.
Also, the cost of insuring against a Credit Suisse debt default hit a new all-time high of 466 bps, up by 49 bps from Friday's close.
In November 2022, S&P rated Credit Suisse one level above junk.
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