Credit Suisse Reveals $2.85 Bln Writedowns

By Andrew Hurst, European Banking Correspondent

ZURICH (Reuters) - Credit Suisse (CSGN.VX) has written $2.85 billion off the value of its asset-backed investments and suspended some traders after finding pricing errors on its books, hammering its shares.

Credit Suisse's CEO Brady Dougan said most of the writedowns were the result of worsening market conditions in the first six weeks of the year but declined to quantify losses resulting from mismarks by traders, pending an internal review.

"A lot of the repricing is due to movements in markets," Dougan said on a conference call with analysts. "We remain well capitalized."

The bank said the writedowns 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 for the quarter.

The writedown and mismarking errors are the latest in a string of shocks from global banks, including huge new subprime-related exposures at rival UBS (UBSN.VX) and a trading scandal exposed last month at Societe Generale (SOGN.PA).

Dougan said it appeared the traders who were suspended had been slow to adjust the value of their trading portfolios to fast-moving developments in markets. "It seems to be a lateness in marking but it's still a matter under review."

The disclosure came a week after the bank unveiled fourth quarter net profit of 1.329 billion Swiss francs ($1.22 billion), and trimmed its subprime-linked writedowns for 2007 to 2 billion francs, less than the charges so far this year unveiled on Tuesday.

Dougan did not expect the writedowns and the investigation into mismarking to affect its 2007 results. He would not say how many traders had been suspended although only a few were involved. "We're not going to quote a specific number," he said.

Credit Suisse executives played down any suggestions of parallels between its own traders and a scandal at Societe Generale where huge losses were blamed on lone trader Jerome Kerviel. "This was instigated as a result of our normal control procedures, not as a result of the Kerviel incident," said the bank's Chief Risk Officer Wilson Ervin.

"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 (C.N) and Merrill Lynch MER.N, 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 Stearns banking analyst Chris Wheeler in a note.

Credit Suisse shares fell over 10 percent in early trading and were down 7.14 percent at 52.70 Swiss francs at 1540 GMT.

The revelations were particularly embarrassing for Credit Suisse, as it had only recently, after painful restructuring, shaken off a reputation for being accident-prone and springing unpleasant surprises on investors.

WRITEDOWNS ON RANGE OF EXPOSURES