They often offer high rates of return but the holders take on most of the risk of loans being defaulted on. The Credit Suisse spokesman declined to comment on who knew what and when.Īround $600 million of the write-downs came from securitised products - which include collateralised loan obligations (CLOs) - and distressed credit.ĬLOs are packages of debt, often corporate loans, which are put together and sold on to investors. "It's hard to imagine that nobody knew about this stuff." "If the CFO didn't know about it, then sure as hell the chief risk officer would have done, which means everybody would have done," said one former board member of a Credit Suisse investment banking subsidiary. Some people familiar with the Zurich-based bank's operations expressed surprise and scepticism that top management could be unaware of such important details. "Does it raise concerns? Yes it does," said Andreas Venditti, an analyst at Swiss private bank Vontobel who rates Credit Suisse's stock "hold". Now Thiam faces questions about the bank's risk controls and oversight by senior management of part of its markets business. A further $346 million in write-downs followed in the first quarter as of March 11, the bank disclosed on March 23. 4 the markets division reported an adjusted pre-tax loss of 658 million Swiss francs ($686.35 million) for the quarter, in which Credit Suisse racked up $633 million in write-downs on illiquid trades. Thiam and O'Hara declined further comment on Monday. "He only learned of the extent of the positions in January and took steps to address the situation," the spokesman said.
In response to Reuters questions about the bank's risk management and the exchange between Thiam and O'Hara, a Credit Suisse spokesman reiterated those comments. Thiam has said he and other senior bank officials were unaware of the size of the positions behind the write-downs but that no trading limits had been breached or trades concealed. "You and I need to discuss case by case the appropriate inventory levels," Thiam said. 25, according to the materials shown to Reuters on condition that no further details would be disclosed. "I wonder about the absolute size of our inventory in a number of activities," he told Global Markets head Tim O'Hara on Jan. In January, Thiam, by then just over six months into his job as CEO of Switzerland's second-biggest bank, wondered whether Credit Suisse had gone too big on some trades and addressed the issue with another top executive. The write-downs have compounded for Credit Suisse what has already been a tough start to 2016 for all investment banks, with its share price down around 38 percent so far this year, one of the biggest slides of all large European lenders.
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