Credit Suisse flags ‘material weaknesses’ in reportingPosted On: Mar. 14, 2023 8:23 AM CST
(Reuters) — Credit Suisse said in its 2022 annual report that it has identified “material weaknesses” in internal controls over financial reporting and has not yet stemmed customer outflows.
“As of December 31, 2022, the Group’s internal control over financial reporting was not effective, and for the same reasons, management has reassessed and has reached the same conclusion regarding December 31, 2021,” it said in the filing published Tuesday.
Auditor PricewaterhouseCoopers in the report included 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 financial position of the bank in 2020 through 2022.
The reporting weaknesses come as Credit Suisse is seeking to recover from a string of scandals that have undermined the confidence of investors and clients. Customer outflows in the fourth quarter rose to more than 110 billion Swiss francs ($120 billion).
On Tuesday the bank said “outflows (had) stabilized to much lower levels but had not yet reversed.”
The cost of insuring against a Credit Suisse debt default rose to a record above 520 basis points, according to S&P Global Market Intelligence.
Banks around the world have been swept up in a sell-off prompted by the collapse of two U.S. lenders last week that forced regulators to step in and guarantee deposits.
Swiss regulator FINMA on Monday said it was seeking to identify any potential contagion risks for the country's banks and insurers following the U.S. bank failures.
Scheduled for release last week, the annual report was delayed following a request from the U.S. Securities and Exchange Commission, which had raised questions about the bank's past financial statements.
Credit Suisse said the SEC had called it about previous revisions to consolidated cash flow statements for 2019 and 2020.
The bank said Tuesday it is working on a “remediation plan” and will implement “robust controls to ensure that all non-cash items are classified appropriately within the consolidated statement of cash flows.”