Credit Suisse Shares Drop After SEC Query Delays Annual Report

(Bloomberg) — Credit Suisse Group AG shares dropped close to a record low after the Swiss bank said it was delaying publication of its annual report following a last-minute query by US regulators over previous financial statements.

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The shares fell as much as 6.4% to 2.504 Swiss francs ($2.672) in Zurich, with the bank’s market capitalization edging close to the $10 billion mark. Credit Suisse has lost about 9% of its value so far this year.

The Zurich-based lender was due to publish the reports on Thursday morning but received a late call from the Securities and Exchange Commission on Wednesday evening. Officials there were querying revisions Credit Suisse made to cash-flow statements related to the financial years 2019 and 2020, as well as related controls, the bank said.

The question mark over the bank’s previous accounting arrives at a time when it is undergoing a complex restructuring after years of losses and scandals. Changes include the carving out of its investment bank, selling businesses not closely tied with the key wealth unit and cutting 9,000 jobs. Long-time major shareholder Harris Associates said this week it had exited its stake in the bank, and the lender has said it will make a substantial loss this year.

Credit Suisse confirmed its 2022 financial results, previously released on Feb. 9, adding that they are not affected by the regulators’ technical inquiries. No other regulators are involved, head of investor relations Kinner Lahkani said on a call with journalists.

It’s not uncommon for the SEC to raise questions to banks over their disclosures, though the delay of an annual report is more rare.

Read More: Credit Suisse Loses One of Biggest Backers as Herro Sells

“We have generally not focused on cash flow statements; the amounts are relatively small and the restatement was previously disclosed,” analysts including Anke Reingen at Royal Bank of Canada said in a note. “However, questions with respect to accounting, especially from the SEC, are negative.”

The bank did not disclose when it would publish the reports and said management believed it is “prudent to briefly delay” until they could better understand the nature of the regulators’ requests.

In its 2021 annual report, Credit Suisse said it had identified “not material” accounting issues related to certain securities lending and borrowing activities. That led to a number of revisions for the financial year 2020. As a result of the changes, the group’s total assets increased and reduced related leverage ratios by 10 basis points.

For more information see the revisions made under Note 1 of the bank’s 2021 annual report.

Read More: Bloomberg Intelligence’s updated credit analysis for Credit Suisse

–With assistance from James Cone.

(Updates share price.)