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Credit Suisse Identifies "Material Weaknesses" in Internal Controls

Credit Suisse released its delayed annual report and identified "material weaknesses" in its internal controls over financial reporting. The report also stated that the bank had yet to stem customer outflows.

Credit Suisse building
Credit Suisse building

Adverse Opinions from Auditors

Auditors PwC included an adverse opinion on the effectiveness of the bank's internal controls in the annual report.

Customer Outflows on the Rise

In the fourth quarter, the bank's customer outflows rose to more than 110 billion Swiss francs ($120 billion), putting it in breach of some liquidity buffers. Although CEO Ulrich Koerner had stated that the bank saw money "coming back in different parts of the firm," the bank now says that outflows have stabilized too much lower levels but have not yet reversed.

Delayed Annual Report Due to SEC Request

The annual report was scheduled for release last week. Still, it was delayed following a request from the U.S. Securities and Exchange Commission (SEC), which raised questions about the bank's earlier financial statements. The SEC had also called the bank regarding revisions to consolidated cash flow statements for 2019 and 2020.

Record Low Share Price and Rising Debt Default Costs

The bank's share price fell more than 14% to a record low amid market turmoil triggered by the collapse of U.S. lenders Silicon Valley Bank and Signature Bank. The cost of insuring against a Credit Suisse debt default also rose to a new all-time high.

Swiss Regulator Seeks to Identify Contagion Risks

Swiss regulator FINMA warned that it sought to identify any potential contagion risks for the country's banks and insurers following the collapses of the U.S. banks. The regulator stated that the aim is to identify any cluster risks and potential for contagion at an early stage.