© Reuters. FILE PHOTO: The logo of Swiss bank Credit Suisse is seen at its headquarters in Zurich, Switzerland, March 24, 2021. REUTERS/Arnd Wiegmann/
By Noele Illien and Stefania Spezzati
ZURICH (Reuters) – Credit Suisse said in its 2022 annual report that the bank identified “material weaknesses” in internal controls over financial reporting and has not yet halted customer departures.
“As of December 31, 2022, the Group’s internal control over financial reporting was not effective and, for the same reasons, management reassessed and reached the same conclusion as of December 31, 2021,” it said in the statement. posted Tuesday.
Auditor PricewaterhouseCoopers (PwC) included in the report an “adverse opinion” on the effectiveness of the bank’s internal controls over its reporting, but its statements “present fairly, in all material respects” the bank’s financial position in 2020 until 2022.
Swiss regulator FINMA said it is clear that the bank must have appropriate control processes.
“When control weaknesses are identified, we expect a timely correction of control weaknesses,” he told Reuters. “We are in contact with the bank on this matter.”
The reporting weaknesses come as Credit Suisse seeks to recover from a series of scandals that have undermined investor and customer confidence. Customer outflows in the fourth quarter rose to more than 110 billion Swiss francs ($120 billion).
On Tuesday, the bank said that “outflows (had) stabilized at much lower levels, but had not yet reversed.”
Reiterating what the bank had stated in the past two sets of quarterly results, the annual report details how the outflows led Credit Suisse to “partially use liquidity buffers at the group and legal entity level” with the bank stating that ” fell below a certain legal entity.” high level regulatory requirements”.
Banks must meet certain liquidity reserve requirements to meet potential customer demands for cash.
Asked on an analyst call on February 9 if liquidity gaps have since been resolved, CFO Dixit Joshi replied: “absolutely yes.”
Shares in the bank fell more than 3% before paring losses to trade 1.55% lower at 1152 GMT.
The cost of insuring against a default on Credit Suisse’s debt rose to a record above 520 basis points, according to S&P Global (NYSE:) Market Intelligence.
Banks around the world have been swept up in a sell-off sparked by the collapse of two US lenders last week that forced regulators to step in and guarantee deposits.
FINMA said on Monday that it was trying to identify any potential contagion risks to the country’s banks and insurers following the US bank failures.
Scheduled to be released last week, the annual report was delayed following a request from the US Securities and Exchange Commission (SEC), which raised questions about the bank’s previous financial statements.
Credit Suisse said it had been called by the SEC about previous revisions to the consolidated statements of cash flows for 2019 and 2020.
The bank said on Tuesday that it is working on a “remediation plan” and will implement “robust controls to ensure that all non-cash items are properly classified within the consolidated statement of cash flows.”
($1 = 0.9129 Swiss francs)
