Swiss banking giant Credit Suisse has admitted to "material weaknesses" in its financial reporting controls, accordi.ng to its annual report released on Tuesday. The report, which was delayed due to concerns from U.S. regulators, sheds light on the bank's struggles to maintain oversight amidst a changing financial landscape.
"As of Dec 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 Dec 31, 2021," the Swiss bank said in the filing published Tuesday.
Credit Suisse was scheduled to deliver its annual report last week, but it was delayed due to a last-minute request from the U.S. Securities and Exchange Commission for cash-flow statement modifications for 2019 and 2020.
In recent years, Credit Suisse has experienced an onslaught of issues, including its connection to the collapses of American asset manager Archegos and U.K. business Greensill in 2021.
The story of Credit Suisse and its tumultuous relationship with Archegos and Greensill is one of ambition, risk-taking, and ultimately, devastating consequences.
At first, Credit Suisse saw an opportunity to expand its reach and boost its profits by partnering with these two firms. Archegos, a US-based asset manager, promised to deliver impressive returns on its investments, while Greensill, a UK financial firm, offered a new way to package and sell supply chain financing.
Credit Suisse, always eager to push the envelope and gain an edge in the market, eagerly jumped into bed with both firms.
But as time went on, cracks began to show in these relationships. Archegos, led by the enigmatic Bill Hwang, was making risky bets on volatile stocks, and when those bets went south, Credit Suisse found itself on the hook for billions of dollars in losses.
Meanwhile, Greensill's murky financial dealings began to draw scrutiny from regulators, and Credit Suisse found itself tied up in a web of complex financial products that it couldn't easily unwind.
The fallout was swift and brutal. Credit Suisse's reputation was tarnished, its executives faced scrutiny and criticism, and its bottom line took a massive hit.
Meanwhile, shares of Switzerland's second-largest bank have reached an all-time low on Monday due to worries of contagion following the failure of Silicon Valley Bank.
Its stock price fell by as much as 5% on Tuesday following the release of the study, but recovered by more than 1% later in the day as a result of a global market rebound.
The Swiss financial watchdog FINMA stated that it is obvious that the bank must have proper control procedures in place.