Credit Suisse reveals further write-downs

Confidence in the banking sector received a fresh blow today after Swiss bank Credit Suisse revealed further write-downs.

The group said an internal review found pricing errors by some traders meant it was cutting the value of its investments by $2.85bn (€1.9bn).

The news cast a shadow over results from banking giant Barclays and spread fresh nerves about the impact of the credit crunch on banks.

Credit Suisse said the write-down will hit first-quarter profits by about $1bn (€678m).

Last week it announced a $1.88bn (€1.3bn) write-down for subprime-related assets, but still posted a fourth-quarter net profit of $1.2bn (€814m).

Credit Suisse said that despite the impact the revaluation will have on the company’s balance sheet, it expects to remain profitable in the first quarter of the year.

Shares in Barclays, which reported annual profits of €9.4bn despite a €2.2bn US sub-prime hit, sank alongside high street counterparts such as Lloyds TSB and Royal Bank of Scotland.

David Buik, of Cantor Index, said the Credit Suisse announcement was untimely and gave Barclays’ shares “no chance” after its “positive results”.

The news also hit the positive sentiment in banks which built up on Monday when the sector’s shares moved ahead strongly.

“Just as the market was beginning to think banks were looking good value this exocet missile landed,” Mr Buik said.

And Richard Hunter, of Hargreaves Lansdown stockbrokers, said: “Barclays have largely delivered what the market wanted to hear, but unfortunately events have somewhat overtaken them.

“The separate announcement of a further write-down from Credit Suisse has been particularly unhelpful, and has cast fresh doubt over the sector at a time when figures such as these from Barclays could have begun to rebuild some confidence.”