Loss ahead for Credit Suisse after rogue blow

The bank, led by chief executive Brady Dougan, today revealed that rogue traders based in its Canary Wharf offices had cost it Swfr2.86 billion (£1.44 billion), and that a "handful of traders" had now been fired.

It said: "With regard to 2008, including valuation reductions, Credit Suisse was profitable through the end of February. In the light of the difficult market conditions in March, at this time Credit Suisse believes it is unlikely to be profitable in the first quarter."

The bank is a major player in collateral debt obligations and mortgage-backed securities, both of which have been at the heart of the credit crunch triggered by the meltdown in America's subprime market.

Credit Suisse has already reacted to the crisis by laying off dozens of staff, and effectively ordering a freeze on hirings and a clampdown on expenses. Today's news is also likely to mean that bonuses, already much-reduced in 2007, will be even lower in 2008.

But the bank's dire views on trading conditions in March come in stark contrast to three of its Wall Street rivals, Goldman Sachs, Lehman Brothers and Morgan Stanley, all of whom reported stronger-than-expected first-quarter results this week.

That has echoes of last month when Credit Suisse revealed that it had discovered mispricing in its CDO division. That occurred on the same day that Barclays, headed by chief executive John Varley, revealed strong 2007 profits and lower writedowns than the City had expected. But Barclays was caught up on the day in the stock market's general fear of banks, and its shares tanked heavily.

After yesterday's unprecedented intervention by the Bank of England and Financial Services Authority to halt a major attack on the HBOS share price, which dropped almost 20% on what it called "malicious rumours", traders were already expecting a rough ride for bank shares today.

Credit Suisse said that after reviewing its valuation of certain asset-backed securities positions, it would take an extra Swfr1.18 billion charge against 2007's earnings and another Swfr1.68 billion in the first quarter of this year.

However, it said it would still pay the planned dividend it announced for 2007, and emphasised that its balance sheet remained strong.

Dougan said: "I am confident in our ability to navigate current market conditions and deliver long-term value to our shareholders.

"We are one of the world's best-capitalised banks and our funding is conservative."

He added that the bank had discovered holes in its control and supervisory processes in the collateral debt obligations department and had introduced systems and procedures aimed at tightening up controls.