Credit Suisse reveals $2.85bn write-downs

Credit Suisse has written $2.85 billion off the value of its asset-backed investments and found mismarking and pricing errors on its books, it revealed yesterday, sending its shares plummeting.

The bank said the write-downs would wipe $1 billion from its first-quarter net income, after taking into account tax credits and cancelling some staff bonuses, but it still expected to stay in profit in the quarter, despite the charge.

The write-down and mismarking errors are the latest in a string of shock announcements by global banks and follow revelations of huge new subprime-related exposures at rival UBS and a trading scandal exposed last month at Sociéte Générale. "This is a disaster," said Helvea analyst Peter Thorne. "This could be the tip of the iceberg."

Unlike UBS, which has been hit by $18 billion of charges, and some major US banks such as Citigroup and Merrill Lynch, Credit Suisse had until now been relatively unscathed by the credit crisis.