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Credit Suisse Cuts Profits $1B on Trader Errors
Trader 'error' prompts bank to take $2.85B writedown; shares plummet
By Jim O'Neill
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Posted Feb 19, 08 6:58 AM CST
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(Newser)
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Credit Suisse share prices plummeted 10% today after the bank announced that some traders had overvalued asset-backed securities, prompting the bank to take a $2.85 billion writedown and drop first-quarter profit projections by $1 billion, Bloomberg reports. Switzerland’s second-largest bank suspended the traders and said it would review 2007 earnings. Markets, already skeptical about the health of the financial industry, reacted negatively.
Yesterday a Qatar sovereign wealth fund announced it had bought a stake in Credit Suisse, which earlier announced $1.8 billion in subprime writedowns for 2007. The news comes on the heels of the scandal at Societe Generale, where rogue trader Jerome Kerviel’s actions led to the worst losses in banking history, fueling concerns about trading oversight.