On August 13, the U.K.'s Financial Services Authority announced that it had fined Credit Suisse $10.7 million, making CS the only i-bank to ever be fined twice by the FSA. The reason for the fine was a lack of oversight and potential misconduct by CS employees, which the FSA says led to a $2.7 billion write-down not being announced until just after the company reported full-year '07 results.
On July 24, Credit Suisse reported earnings of $1.16 billion (1.22 billion CHF) for the second quarter of 2008, down 62% from the same period in 2007. Despite the sharp decline, Credit Suisse beat consensus analyst estimates and improved from its net loss of 2.1 billion CHF. Write downs for the quarter were an "immaterial" $21.3 million (22 million CHF), compared to $5. billion in the first quarter of 2008.
The Swiss central bank demanded that investment banks Credit Suisse and UBS maintain higher capital stocks. Given the ongoing credit crunch, the central bank believes that current capital requirements are too low to ensure that the firms can continue operations as normal. UBS and Credit Suisse are a huge part of the Swiss economy, so ensuring their viability is of interest to the government as well.
On November 1, Credit Suisse released its earnings statement for the third quarter of 2007, which showed an 31% drop in net income from the same quarter in 2006. According to the release, the firm's profits from investment banking were almost completely wiped out by large write-downs of certain debt holdings like mortgage-backed securities and collateralized debt obligations, whose market values had depreciated significantly.
In its third-quarter earnings statement released on November 1, Credit Suisse announced that it had written down $1.9 billion in debt. Around the same time, Citibank announced that it might write down as much as $11 billion more in loans, on top of the over $6 billion it wrote down for its third-quarter earnings release. As more firms continue to write down debt, uneasy investors looking to limit further exposure to the fallout have been selling stock in financial firms such as Credit Suisse.
Despite stress from problems in the U.S. subprime lending industry, Credit Suisse (CS) and the banking industry performs well, due mainly to earnings growth and a strong labor market. Upgrades from analysts at Deutsche Bank contribute to the rise in CS's stock price.
Stock prices drop after reports circulate that Credit Suisse will outsource up to 70% of its information technology (IT) jobs to low-wage countries, mainly in Asia. Credit Suisse official denies the report, and the price begins to recover by early March.
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