Credit Suisse delays annual report after SEC call, shares drop

Credit Suisse has postponed publication of its annual report after a last-minute call from the United States Securities and Exchange Commission (SEC), which raised questions about its earlier financial statements.

The unusual intervention by the U.S regulator is the latest blow to Credit Suisse as it attempts to rebuild investor confidence after a series of scandals and setbacks that have sent its shares plunging and led clients to withdraw billions.

Credit Suisse shares were close to their all-time low in Zurich on Thursday but later recovered much of a 6% loss.

The Zurich-brd bank said the SEC had called it late on Wednesday regarding "certain open SEC comments about the technical assessment of previously disclosed revisions to the consolidated cash flow statements in the years ended December 31, 2020, and 2019, as well as related controls."

So the SEC is calling into question years of previous reports.

The bank had revised how it booked a series of cash flows, including share-brd compensation and foreign exchange hedges.

Credit Suisse (CSGN.S) said that following the call it had decided to postpone publication of its 2022 annual report.

"Management believes it is prudent to briefly delay the publication of its accounts in order to understand more thoroughly the comments received," it said, adding that the 2022 financial results "are not impacted".

The SEC declined to comment on the matter, a spokesman for the organization said.

Other regulatory authorities were not involved, a person familiar with the matter said.

Swiss financial regulator Finma told Reuters that Credit Suisse had informed it of the delayed publication.

"We are in contact with the bank," Finma said.

It remains unclear when the annual report will be released. The delay was unusual, according to five attorneys and experts Reuters spoke to.

"The disclosure is strategically and carefully worded so as not to raise alarms," said Jacob Frenkel, a former SEC enforcement attorney who is now government investigations and securities enforcement practice chair for law firm Dickinson Wright.

It "lays the groundwork for the explanation for the revisions to the financial statements. Nothing about the release has an 'enforcement' centric tone."

Still, the Credit Suisse announcement concerned analysts.

"(It) does not help investor sentiment and it does not help in rebuilding trust," said Andreas Venditti from Vontobel.

Switzerland's second-biggest bank has begun a major overhaul of its business, cutting costs and jobs to revive its fortunes, including creating a separate business for its investment bank under the CS First Boston brand.

Daniel Bosshard from Luzerner Kantonalbank described Credit Suisse as "a major construction site" and said "the share is only suitable for turnaround speculators."

In February, Credit Suisse reported that 2022 brought its biggest annual loss since the 2008 global financial crisis after rattled clients pulled funds from the bank, and it warned that a further "substantial" loss would come this year.

Among a string of scandals, Credit Suisse was hard hit by the collapse of U.S. investment firm Archegos in 2021 as well as the freezing of billions of supply chain finance funds linked to insolvent British financier Greensill.

The bank was also rocked by a prosecution in Switzerland involving laundering money for a criminal gang.

Meanwhile, credit ratings agency Standard & Poor's downgraded Credit Suisse to just one level above so-called junk status in November last year.

Dow closes down 345 points, Bank of America warns 'crashy vibes of March' set to worsen

The Dow dropped for a fourth consecutive day, closing down 345 points. The S&P 500 lost 1.45% and the Nasdaq shed 1.76%.

Earlier on Friday, analysts at the Bank of America have warned the 'crashy vibes of March', driven by high inflation, were set to worsen as markets suffered on Friday.

California state regulators shuttered the bank on Friday, and the Federal Deposit Insurance Corporation (FDIC) immediately took control of its $209 billion in assets and $175.4 billion in deposits.

Amid the turmoil, some of the market's sharpest drops were again coming from the financial industry, where stocks tanked for a second day. The dips came despite a highly anticipated report on Friday that showed signals inflation is cooling, including slower pay raises for workers.

Inflation may be 'cooling', for now, but it's not stopped, nor is it reversing, and there's no reason to believe the situation is going to improve.

Friday's struggles come amid what strategists in a Bank of America Global Research report called 'the crashy vibes of March'.

Markets have been twitchy recently on worries that high inflation is proving difficult to drive down, which could force the Federal Reserve to reaccelerate its hikes to interest rates. Such hikes can undercut inflation by slowing the economy, but they also drag down prices for stocks and other investments and raise the risk of a recession later on.

All signs point to much of the West already being in recession.

Brent Schutte, chief investment officer at Northwestern Mutual Wealth, said: 'There are starting to be cracks that are appearing. SVB is a warning for the Fed that their actions are beginning to have an impact.'

The Fed has already raised rates at the fastest pace in decades and made other moves to reverse its tremendous support for the economy during the pandemic. It's effectively pulling money out of the economy, something Wall Street calls 'liquidity', which can tighten the screws on the system.

'This is a warning sign that the liquidity is draining, and the most vulnerable areas are starting to show it, which tells me the rest of the economy is not too far behind,' Schutte said.

This number is crucial on Wall Street because the Fed is focusing on wage growth in particular in its fight against inflation. It worries too-high gains could cause a vicious cycle that worsens inflation, even though raises help workers struggling to keep up with rising prices at the register.

Among other signs of a cooling but still-resilient labor market, the unemployment rate ticked up and the percentage of Americans with or looking for jobs edged up by a tiny bit.

Such trends mean traders are swinging back their bets for the size of the Fed's next rate increase.

Some of the sharpest drops on Wall Street came from banking stocks on worries about who else may suffer a cash crunch if interest rates stay higher for longer and customers pull out deposits.

That would set up pain because a flight of deposits could force them to sell bonds to raise cash, right as higher interest rates knock down prices for those bonds.

Besides SVB Financial's struggles, Silvergate Capital also said this week it's voluntarily shutting down its bank. It served the crypto industry and had warned it could end up 'less than well-capitalized'.

Stock losses were heaviest at regional banks. First Republic Bank tumbled 25.8 percent. It filed a statement with regulators to reiterate its 'strong capital and liquidity positions.'

Losses were more modest at the biggest banks, which have been stress-tested by regulators following the 2008 financial crisis.