Credit Suisse reveals $2.85 billion write-downs

By Andrew Hurst, European Banking Correspondent

ZURICH (Reuters) - Credit Suisse has written $2.85 billion off the value of its asset-backed investments and found mismarking and pricing errors on its books, it revealed on Tuesday, sending its shares plummeting.

The bank said the write-downs would wipe $1 billion from its first-quarter net income, after taking into account tax credits and cancelling some staff bonuses, but it still expected to stay in profit in the quarter, despite the charge.

The write-down and mismarking errors are the latest in a string of shock announcements by global banks and follow revelations of huge new subprime-related exposures at rival UBS

and a trading scandal exposed last month at Societe Generale.

"This is a disaster," said Helvea analyst Peter Thorne. "This could be the tip of the iceberg."

Unlike UBS, which has been hit by $18 billion of charges, and some major U.S. banks such as Citigroup and Merrill Lynch, Credit Suisse had until now been relatively unscathed by the credit crisis.

"Those who thought that certain banks such as Credit Suisse were 'out of the woods' should exercise caution," said Bear Stears banking analyst Chris Wheeler in a note.

Credit Suisse said the charges reflected "significant adverse first-quarter 2008 market developments".

A spokesman for Credit Suisse said he was unable to quantify the impact of the errors and mismarkings on the size of the write-downs.

Credit Suisse shares fell over 10 percent in early trading and were down 8.46 percent at 51.95 Swiss francs at 6 a.m. EST.

WRITEDOWNS ON RANGE OF EXPOSURES

The write-downs were across the range of Credit Suisse's exposures to commercial mortgage-backed securities (CMBS), retail mortgage-backed securities (RMBS) and collateralized debt obligations (CDOs), the spokesman said.

CDOs are repackaged securities with substantial exposure to subprime mortgages, which have suffered a collapse in their value as borrowers have reneged on loans in record numbers.

Credit Suisse said it would hold a conference call with analysts and reporters at 9 a.m. EST.

"It looks like the decline in market indices is accelerating in the first quarter, and that worries me more than the mistakes," said Simon Maughan, an analyst at MF Global.