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November 2, 2007

Credit Suisse Weathers Sub-Prime Storm

by Stewart Douglas

Story link: Credit Suisse Weathers Sub-Prime Storm

Leading investment bank Credit Suisse has today announced that unlike many of its leading investment competitors it had managed to stave off the worst of the sub-prime market crisis in its third quarter results, suggesting a more risk-friendly investment strategy across the CS portfolio.

Credit Suisse announced that it had realised an income of 1.3 billion Swiss Francs over the third quarter, down over 10% on results of the second quarter. However that result is a significant improvement on the loss announced by rival UBS earlier in the week which saw their net earnings falling negatively by 830 million Swiss Francs.

The bank did nevertheless refuse to comment on upcoming performance, leaving many investors to questions whether there may still be writedowns to come in the Credit Suisse accounting period which could have an adverse effect on the value of its sales.

Investments in stocks and traditional securities have been badly hit over the last few months, leading to significant book devaluations across major investment houses, as have those that launched into the risky sub-prime securities market separately.

Over exposure and lack of risk consideration have been key to the high profile losses, and subsequent dismissals over the course of this month and last. It remains to be seen whether the investment market will adapt, and increase diversity in their investment portfolios.

Many other investment banks have reported losses in their investment divisions as a result of debt linked securities devalued over the summer months and the following credit crisis, including UBS, Bear Stearns, Merrill Lynch and UBS.

Unlike Merrill Lynch who lost their chief executive of five years this week, it seems highly unlikely that Credit Suisse will effect any change at senior management level in light of their performance over the last period.

 

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