Non-conforming news

Credit Suisse disclosure rattles confidence

23 February 2008

Many experts were looking to the results season as a time when every bank would disclose what debts it had and write-downs it would need to make, thereby giving lenders knowledge about which banks they could fund.

However, news that suspected rogue traders had caused Credit Suisse to write down a further £1.5 billion meant that any confidence in lenders coming clean had evaporated.

Christopher Wheeler, analyst at Bear Stearns, said: “Given the tentative nature of the announcement, it is not certain that we have heard the last of this issue. Those who thought that certain banks such as Credit Suisse were ‘out of the woods’ should exercise caution."

One source told Mortgage Introducer: “This is bad form. It is one of the worst things that could have happened and it just makes people think the worst of everyone.

"You just can’t come out two weeks later and write more down, whatever the reason. We were hoping that once the reporting season was out of the way then we might get an issuing from someone but it doesn’t look as good now.”

Clive Kornitzer, chief operating officer at Abbey for Intermediaries, agreed and said he believed there would be a flight to strength and strong brands. “The Credit Suisse news came at a bad time as the results that are coming out were supposed to show who is solid and who isn’t.

"In a time of uncertainty, there will be a flight to strength and established names but for a lot of people, it will be all about what the results say.”