Credit Suisse finds ‘material weaknesses’ in financial reporting, says outflows ‘not yet reversed’

Credit Suisse on Tuesday said its net asset outflows had declined but “not yet reversed” and announced that “material weaknesses” were identified in its financial reporting processes for 2022 and 2021.

The embattled Swiss lender published the annual report scheduled for last Thursday, which was delayed by a late call from the U.S. Securities and Exchange Commission (SEC).

That conversation related to a “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.”

In the Tuesday annual report, Credit Suisse revealed that it had identified “certain material weaknesses in our internal control over financial reporting” for the years 2021 and 2022.

These issues related to a “failure to design and maintain an effective risk assessment process to identify and analyze the risk of material misstatements” and various flaws in internal control and communication.

Despite this, the bank said that it was able to confirm that its financial statements over the years in question “fairly present, in all material respects, [its] consolidated financial condition.”

Credit Suisse confirmed its 2022 results announced Feb. 9, which showed a full-year net loss of 7.3 billion Swiss francs ($8 billion).

Liquidity risk

In late 2022 the bank disclosed that it was seeing “significantly higher withdrawals of cash deposits, non-renewal of maturing time deposits and net asset outflows at levels that substantially exceeded the rates incurred in the third quarter of 2022.”

Credit Suisse saw customer withdrawals of more than 110 billion Swiss francs in the fourth quarter, as a string of scandals, legacy risk and compliance failures continued to plague it.

“These outflows stabilized to much lower levels but had not yet reversed as of the date of this report. These outflows led us to…