E-commerce and Globalization: An Evolving Relationship

After the discovery of "significant deficiencies" in the financial reporting, Credit Suisse shares fell a further 5%.

• The troubled Swiss lender released its annual report on Thursday instead of last Thursday as originally planned due to a call from the U.S. Securities and Exchange Commission.
  
  
  
  
  

• Credit Suisse reaffirmed its 2022 results, which were revealed on Feb. 9 and indicated a full-year net loss of 7.3 billion Swiss francs ($8 billion) after the conclusion of negotiations with the US regulator.

• The bank's stock dropped another 5% in early Tuesday trade in Europe, reaching a fresh record low.

After the bank's announcement that it had discovered "significant deficiencies" in its financial reporting systems for 2022 and 2021, the stock dropped by 5% in early Tuesday trade to reach a new all-time low.

Since then, shares have marginally reduced their losses, but as of 9:30 am London time, they were still down more than 4%.

The troubled Swiss lender made the comment public in its annual report, which wasn't released last Thursday as planned due to a last-minute contact from the U.S. Securities and Exchange Commission (SEC).

Technical analysis of previously reported modifications to the consolidated cash flow statements for the years ended December 31, 2020, and 2019, as well as associated controls, were the subject of the SEC interaction.

Credit Suisse disclosed that it has discovered "some substantial deficiencies in our internal control over financial reporting" for the years 2021 and 2022 in its annual report on Tuesday.

These problems stemmed from a "failure to create and maintain an effective risk assessment procedure to detect and analyze the possibility of substantial misstatements" as well as several weaknesses in internal communication and management.

Although this was the case, the bank claimed that it was nevertheless able to affirm that its financial statements for the pertinent years "fairly portray, in all significant aspects, [its] consolidated financial status."

The company's net asset outflows have decreased but "not yet reversed," Credit Suisse added. The bank reaffirmed its 2022 results, which were released on February 9, and revealed an $8 billion net loss for the entire year of 7.3 billion Swiss francs.

Availability risk

In late 2022, the bank disclosed that it had "much higher cash deposit withdrawals, non-renewal of maturing time deposits, and net asset outflows at levels that substantially exceed the rates incurred in the third quarter of 2022."

More than 110 billion Swiss francs were taken out of Credit Suisse's accounts by customers in the fourth quarter as a spate of scandals, legacy risk issues, and compliance issues persisted.

These outflows steadied at considerably lower levels, but as of the publication date of this article, they still hadn't stopped. We partially used our liquidity buffers as a result of these outflows, which put us in violation of several legal entity-level regulatory requirements.

These factors, according to Credit Suisse, have "exacerbated and may continue to worsen" liquidity issues. The decrease in assets under management is anticipated to have an impact on the bank's capital position goals since it will diminish net interest revenue as well as recurring commissions and fees.

The audit warned that failing to stop the withdrawals and recover our deposits and assets under management might seriously harm our business operations and financial standing.

A further "significant" financial loss is anticipated in 2023, according to Credit Suisse, which reaffirmed that it had taken "decisive action" on legacy concerns as part of its continuing comprehensive strategic makeover.

The annual report revealed that the bank's board jointly declined a bonus for the first time in more than 15 years despite collecting a combined fixed pay of 32.2 million Swiss francs.