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Analysts: Credit Suisse set for further subprime writedowns

Switzerland’s second biggest bank Credit Suisse is expected to post writedowns running into billions of dollars on Thursday amid the ongoing fallout from the US subprime crisis, analysts said.

Market watchers are expecting the bank to announce fresh writedowns of up to 6 billion Swiss francs (€4 billion, $6.4 billion) when it posts its first quarter results on Thursday. Those charges are likely to see the bank post a Q1 loss of up to 4 billion Swiss francs. Bank Vontobel’s Claudia Meier is one of the most negative, forecasting a net loss of four billion Swiss francs against most estimates of around one billion. “As we see it, the market might be too optimistic on this point and we therefore remain cautious ahead of the results,” she noted. Switzerland’s two largest banks have been hard hit by the US subprime home loan crisis, with rival UBS posting its first-ever full year loss last year while its writedowns so far exceed $37 billion.

Credit Suisse has so far fared better, having emerged with a profit for 2007. But market confidence was shaken when in March it issued a profit warning for the Q1, citing exposure to the US subprime crisis, and mispricing of certain assets by some traders who had since been suspended. It also revised figures released earlier, cutting its 2007 net profit to 7.76 billion Swiss francs from the February figure of $8.55.

Writedowns have reached 3.2 billion Swiss francs so far, including 2.86 billion announced in March. Included in the March writedowns was 1.18 billion Swiss francs related to the fourth quarter of 2007 and 1.68 billion for the Q1 of 2008. However, observers view the bank’s estimates as optimistic. Credit Suisse did not specify a possible Q1 bottomline figure. Swiss newspaper SonntagsZeitung cited its own estimates and said in a report on Sunday the bank’s net loss could reach two billion Swiss francs, with writedowns of up to six billion Swiss francs.

Amidst widespread woes across the global financial sector, Credit Suisse has confirmed that it is further slashing its headcount. “I can confirm job cuts affecting roughly 500 people globally, on top of the 500 announced in January,” a spokesman told media on Wednesday. (The Economic Times)