swiss bankCredit Suisse Group AG said on Thursday it would adopt a new plan to remedy “substantial weaknesses” in its financial reporting and control procedures over the past two years. The bank was reviewing its financial reports after a complaint from the U.S. Securities and Exchange Commission (SEC) last week.
In its annual report released on the 14th, the bank explained that in both 2021 and 2022, “the group’s internal controls over financial reporting were ineffective.” “This led to the conclusion that the disclosure controls and procedures were also ineffective.” The significant weaknesses identified relate to deficiencies in the design and maintenance of effective risk assessments in financial reports.
In addition, PricewaterhouseCoopers (PwC), which “audited the financial statements for the fiscal year ended December 31, 2010,” said, “We objected to the effectiveness of the Group’s internal controls on financial reporting as of I have expressed my opinion.” However, the bank said its financial statements for both 2021 and 2022 “represented correctly” its financial position.
Credit Suisse was due to release its annual report last week but postponed it after the SEC made last minute inquiries about its cash flow reports for 2019 and 2020. The bank said talks on the matter have been completed.
Credit Suisse reveals ‘significant weaknesses’ in financial reporting and control procedures over the past two years
Source: Bloomberg
Chief Executive Officer Ulrich Kellner is embarking on a complex restructuring process to restore profitability, but the sell-off in financial stocks following the collapse of Silicon Valley Bank (SVB) is likely to make matters worse.
Credit Suisse’s announcement added to worries about stress in the banking sector, and two-year US Treasury yields temporarily fell 15 basis points (bp, 0.01%) to 3.82%. On the 14th, it rose to 4.19% at one point.
Credit Suisse shares fell sharply on the Zurich market on Thursday.
Significant weaknesses have led to revisions to reports over the past few years, according to the announcement. It said it would require “substantial resources” to correct this critical weakness and flaw.
pay back
According to a compensation report released at the same time, chairman Axel Lehmann will decline to receive a salary of 1.5 million Swiss francs (about 219 million yen) in 2022. The bank’s 2022 performance was the worst since the 2008 financial crisis.
The chairman, who took office in January 2022, will not receive compensation on top of salaries paid to board members. A report on remuneration was also deferred from being published along with the annual report.
Lehmann’s salary for April 2022-April 2023 was CHF3 million. A total of CHF3.8 million is expected to be presented at the Annual General Meeting for the next remuneration period. Credit Suisse also plans to increase the equity portion of its chairman’s compensation to 50%, up from the current 33%.
Kellner’s salary for 22 years is CHF2.5 million, including his time as a member of the board before he became CEO.
Original title:Credit Suisse Finds ‘Material Weakness’ in Reporting Since 2021、Credit Suisse Finds ‘Material Weakness’ in Financial Reporting、*CREDIT SUISSE DROPS 4.6%; FLAGS MATERIAL WEAKNESS IN REPORTING（抜粋）
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