Credit Suisse flags ‘material weaknesses’ in financial reporting
It comes after the global bank cut its bonus pot in half after a ‘poor financial performance’ and ‘challenging’ year.
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Your support makes all the difference.Credit Suisse has revealed it found “material weaknesses” in its internal controls over financial reporting, as it said its bonus pot has been slashed by half after a challenging year.
The Switzerland-based global bank saw its share price drop to its lowest level ever last week after saying it would be late publishing its 2022 annual report.
After releasing the report on Tuesday, pushed back from last week, it said it had identified reporting weaknesses relating to a failure to set up an effective risk assessment process.
The group said: “The material weaknesses that have been identified relate to the failure to design and maintain an effective risk assessment process to identify and analyse the risk of material misstatements in its financial statements.
“As a result of these material weaknesses, the group chief executive officer and chief financial officer have concluded that, as of December 31 2022, the group’s disclosure controls and procedures were not effective.”
It is the latest misstep for the bank which has been embroiled in a string of fraud and misconduct issues over several years.
Given the poor financial performance in 2022 and challenging situation for the firm at the beginning of the three-year transformation, the chairman proposed to voluntarily waive his chair fee of 1.5 million Swiss francs
It is in the midst of a big restructuring plan, having recorded a heavy group net loss of 7.3 billion Swiss francs (£6.6 million) over last year.
As a result of the losses, it cut its bonus pot by half from 2021 levels, but nevertheless still dished out some 1 billion Swiss francs (£90 million) among more than 38,000 bankers.
The incentive pool was set at the “minimum level considered appropriate to enable to honouring of contractual commitments” and to avoid damage from employees leaving the firm in search of better pay deals.
Credit Suisse chief executive Ulrich Korner took home a total pay packet of 2.5 million Swiss francs (£2.3 million) last year, which included his base salary, pension and benefits.
And chairman Alex Lehmann was paid a total of 3.2 billion Swiss francs (£2.9 million) over the year, which included a board fee but not a chair fee, which he decided not to take.
The bank said: “Given the poor financial performance in 2022 and challenging situation for the firm at the beginning of the three-year transformation, the chairman proposed to voluntarily waive his chair fee of 1.5 million Swiss francs for the 2022 AGM to 2023 AGM period, and this proposal was accepted by the board.”
Credit Suisse is in the process of slimming down its global workforce by 9,000 over the next three years, meaning it will lose about 10% of its investment bankers in Europe.
It plans to rebuild the bank to be more simplified and focused on its wealth and asset management arms, and deliver returns for shareholders.