Credit Suisse Stock Drops on Report of Writedowns
Credit Suisse fell 1.9 percent in morning trading Monday, following a weekend report that it could be facing writedowns of $2.2 billion due to problems in its mortgage and leveraged-finance business.
Credit Suisse has until now emerged relatively unscathed from the U.S. subprime mortgage crisis which has forced many banks, including Credit Suisse rival UBS, to make huge writedowns.
Swiss Sunday newspaper Sonntag predicted writedowns of as much as 2.5 billion Swiss francs ($2.2 billion) at the bank.
Credit Suisse declined to comment on the story, but new CEO Brady Dougan said "all along we had a clear view that this was a market that was going to have difficulty. The people involved in the business (at Credit Suisse) said we needed to have a more defensive position and so we kept our exposures under control," in an interview with The Banker magazine published January 1.
Concerns that Credit Suisse's exposure to commercial mortgages could come back to haunt it have weighed on the bank's stock for months. Its shares fell 19.7 percent last year.
Credit Suisse is one of the most active global banks in arranging commercial mortgage-backed securities (CMBS). It is also a big player in arranging leveraged loans to finance buyouts of companies by investors.
The bank has said it believes its exposure to CMBS, which it has declined to disclose, is manageable and says it sees no risk of the commercial property market in Europe and the United States suffering an implosion similar to the U.S. subprime mortgage market.
Exposure to the United States' huge subprime market, which went into freefall in 2007 as borrowers with poor credit histories defaulted on loans, has forced tens of billions of dollars in writedowns among major banks such as UBS, Citigroup and Morgan Stanley .
Subprime-related writedowns by major banks at the end of last month amounted to more than $50 billion, according to a Reuters tally.
-- Reuters contributed to this report