Credit Suisse Group reveals 'material' lapses in financial reporting

Credit Suisse Group said it found “material weaknesses” in its reporting and control procedures for the past two years, after questions from US regulators last week.  

Credit Suisse was forced to delay the release of its annual report from last week after the Securities and Exchange Commission raised last-minute queries on cash-flow statements from 2019 and 2020, discussions which the bank said have now been concluded. 

Chief Executive Officer Ulrich Koerner is attempting to push through a complex restructuring in a bid to return the bank to profitability, a process now at risk of becoming bogged down in a broader financial-sector sell-off linked to US lender Silicon Valley Bank.

The Zurich-based bank said on Tuesday that it will take steps to fix ineffective checks on the process it follows to pull together its financial reports. But the firm said its statements for 2022 and 2021 “fairly present” its financial condition.

The reassessment comes in parallel to an “adverse opinion” issued by accountancy firm PwC on the effectiveness of the group’s internal controls. The bank said the material weaknesses played a part in the revisions it had to make a year ago to some past years’ statements. Credit Suisse said its efforts to address the issue “could require us to expend significant resources to correct the material weaknesses or deficiencies.” Shares of the Swiss lender fell as much as 5.6 per cent on Tuesday. The stock is trading near a record low after a 20 per cent drop this year.

In 2021, Credit Suisse suffered a multi-billion dollar hit linked to Archegos Capital Management, the family office linked to investor Bill Hwang.