Credit Suisse suspends traders

Subject: Credit Suisse suspends traders Tue Feb 26, 2008 5:34 am

Credit Suisse bank has suspended a "handful" of traders after an internal review showed up errors in its structured credit trading business.

The suspensions came as the bank faced accusations of "ineptitude" after revealing nearly $3bn in further writedowns just a week after assuring markets its subprime losses were contained.

The bank, the second-biggest in Switzerland, announced on Tuesday it was writing down a further $2.85bn worth of assets linked to the US housing market owing to adverse conditions in the first quarter.

'Disaster'

The new writedowns prompted a raft of criticism from analysts and sent the bank's share price plunging 5.99 per cent to 53.35 Swiss francs in early afternoon trading on the Zurich stock exchange.

Peter Thorne, an analyst at Helvea, the Swiss broker, said: "This is a disaster. This could be the tip of the iceberg."

Unlike the Swiss bank UBS, which has been hit by $18bn of charges, and some major US banks such as Citigroup and Merrill Lynch, Credit Suisse had until now been relatively unscathed by the credit crisis.

"Those who thought that certain banks such as Credit Suisse were 'out of the woods' should exercise caution," said Chris Wheeler, a banking analyst at Bear Stearns.

Credit Suisse said the charges reflected "significant adverse first-quarter 2008 market developments".

The bank said the write-downs would wipe $1bn from its first-quarter net income, after taking into account tax credits and cancelling some staff bonuses, but it still expected to stay in profit in the quarter, despite the charge.

However, a spokesman for Credit Suisse said he was unable to quantify the impact of the errors and mismarkings on the size of the write-downs.

The revelations were particularly embarrassing for Credit Suisse because the bank had only recently shaken off a reputation for being accident-prone and springing unpleasant surprises on investors after completing a painful restructuring.

"This is very disappointing for Credit Suisse, who only last week produced their 2007 results and bragged how successful they were in comparison with other banks," said Thorne.

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Credit Suisse suspends traders

Credit Suisse suspends traders

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