Credit Suisse now?

Is there another domino about to fall? Seems their Saudi bankers have ruled out any more financial assistance.

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There is a delay in producing its Annual Report (Accounts) for ‘technical reasons’.

As a retired auditor i would be very reluctant to sign off an audit report on the accounts without a ‘going concern’ clause somewhere in the report. Should such a clause be included then it would be the kiss of death for the bank!

Going concern:

An auditor can give a going concern opinion when they have doubts about the financial longevity of a company.

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Credit Suisse seems to have been having various issues for a few years, so I am not sure if it related to the SVB type of issues, or even if it is solely/mainly due to sudden rising interest rates. I think (but am not sure) that their issues began before interest rates started rising.

I’ve read many many times that the main characteristic of a bank has to be trust/confidence, and it seems as if CS has lost it already, so they are probably goners in any case.

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Credit Suisse on Tuesday published its annual report for 2022 saying the bank had identified “material weaknesses” in controls over financial reporting and not yet stemmed customer outflows.

Switzerland’s second-biggest bank is seeking to recover from a string of scandals that have undermined the confidence of investors and clients. Customer outflows in the fourth quarter rose to more than 110 billion Swiss francs ($120 billion).

The above is from the link below.

“Material weaknesses in controls over financial reporting” sounds ominous to me.

The Saudis claimed they weren’t going to give any more support because that would put them over 10%, creating a regulatory issue. Sounds like a convenient excuse to me.

It seems like this issue wasn’t caused by higher interest rates, but rather higher interest rates exposed the issue.

Only when the tide goes out you discover who’s been swimming naked.

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I doubt that any bank ever will have a “going concern” clause in their audit opinion. Regulators would step in long before an auditor could issue such an opinion. SVB didn’t have such a clause in their audit report for 2022, yet they were shut down less than three months after the year end and exactly two weeks after their auditor signed the audit opinion (which was dated February 24, 2023).

And if, by some chance, that clause was in an audit opinion, regulators would be at the door the next day.

–Peter

Enron taught us a lesson on the reliability of auditor’s statements. At the same time, I remember reports of Robert Rubin lobbying Treasury to press credit rating firms to not cut Enron’s rating. When that report broke, Mark Hayes commented “Gee, I didn’t know credit ratings were negotiable”.

Steve…misses Mark Haynes

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I was wondering how they got onto this position:

Credit Suisse has lurched from one scandal to another: spying on a former employee, a criminal conviction for allowing drug dealers to launder money, entanglement in a Mozambique corruption case, a chairman violating Covid lockdown rule to a massive leak of client data to the media…

… The bank’s credibility was further hit by soured investments in British financial firm Greensill Capital and US fund Archegos Capital Management, both of which collapsed in 2021.

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I tend to agree with you about banks and going concern clauses but regulators are always playing catch up with such things IMHO.

My old firm, KPMG, signed off the Carillion accounts here in the UK just before it went broke and are now being sued for about £1.3 billion!

Collapse of outsourcer in 2018 with debts of £7bn came after annual accounts were approved by KPMG

Fortunaltely I was never in charge of a bank audit :slightly_smiling_face:

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Swiss central bank ready to backstop Credit Suisse with funds

The central bank issued a joint statement with the Swiss Financial Market Supervisory Authority (FINMA) on Wednesday evening in an attempt to calm markets. …

“The problems of certain banks in the USA do not pose a direct risk of contagion for the Swiss financial markets,” read the SNB/FINMA joint statement. “If necessary, the SNB will provide CS [Credit Suisse] with liquidity.”

The move sends out a signal that the Swiss financial authorities will go to extraordinary lengths to avert the collapse of a bank deemed ‘too big to fail’. It is also probably designed to convince depositors to keep their money at Credit Suisse, thus avoiding a bank run. …

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It’s been going on for a while:

Fed Swaps $9 Billion to Swiss National Bank, Bail Out For Credit Suisse?

https://www.trustnodes.com/2022/10/14/fed-swaps-9-billion-to-swiss-national-bank-bail-out-for-credit-suisse

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A list of Credit Suisse scandals:

Why do they still have a banking licence?

Credit Suisse stole $5,000 from my mother by churning a bond account! I would not mind seeing their demise.

The Captain

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