Credit Suisse warns of ‘material weaknesses’ in financial reporting

theguardian.com:

Credit Suisse has said it found “material weaknesses” in its financial reporting controls and that clients were still withdrawing cash, the latest blow to the Swiss bank as it tries to recover from a string of scandals.

The bank’s shares fell as much as 5% on Tuesday, dropping as low as 2.12 Swiss francs – close to the record low on Monday – before recovering some ground to be down 1.7%. Credit Suisse’s bonds also weakened to record lows on Tuesday, after comments in its delayed annual report.

“Management did not design and maintain an effective risk assessment process to identify and analyse the risk of material misstatements in its financial statements,” Credit Suisse said in its report.

It said its management team was working on a plan to address the weaknesses by “strengthening the risk and control frameworks”.

Credit Suisse was forced to delay the release of its annual report from last week after the US Securities and Exchange Commission raised last-minute queries related to cashflow statements from 2019 and 2020. The banks said those discussions have now been concluded.

Last month, Credit Suisse reported its biggest annual loss since the 2008 global financial crisis and scrapped annual bonuses for its top executives after clients pulled billions from the bank after the scandals.

It said in the annual report that “significantly higher withdrawals of cash deposits” began early in the fourth quarter of last year, and “outflows stabilised to much lower levels but had not yet reversed as of the date of this report”. Outflows jumped to 123bn Swiss francs (£11bn) last year, which made it breach some liquidity buffers.

Russ Mould, the investment director at AJ Bell, said: “While the immediate fallout from the Silicon Valley Bank