Switzerland's second-largest bank delays its annual report disclosure because of last-minute queries from the US securities regulator. finews.asia assesses whether it is further evidence of faulty controls – or not.
Credit Suisse's last-minute delay in publishing its annual report casts a dim light on the crisis-ridden institution. The exact reasons why the powerful US securities regulator, the SEC, still had open comments on its disclosure remain unclear. Given the ban's recent past, this may potentially be a sign of further potential trouble ahead.
Credit Suisse, for its part, maintained that the step would not prompt any changes to its 2022 financial results. They indicated it relates to a technical assessment of previously disclosed revisions, or restatements, of the cash flow statements in 2020 and 2019. According to them, the bank was in constant contact about the matter and had been supplying all the information requested.
Last Minute Call
Still, they ostensibly did not have the time to react to the SEC's overnight queries and that is why the bank's management decided to temporarily delay the publication of the disclosure. Given all this, it is very possible that all of this remains a small and soon-to-be-forgotten sideshow, and that it will not have an impact on the bank's current overall financial condition and stability.
Besides that, analysts indicate that cash flow disclosures at banks generally are not given very high importance. The financial means a bank has that are reflected on its balance sheet and income statement are seen as far more important.
Odd Step
But still, it is an extremely odd step that the SEC decides to probe a small restatement a year after its initial disclosure. If nothing else, it seems to indicate that the bank's control system is not working as it should. As an example, the severe enforcement decision by the Swiss Financial Market Supervisory Authority (Finma) regulator related to the Greensill debacle was made only late last month.
Even if the current situation does not turn out to be serious, it is still infuriating. Credit Suisse did not manage to close a technical discussion with the SEC over something that happened a relatively long time ago in time. Given that, it is irrelevant as to whether the SEC was barking up the wrong tree related to certain minutiae or whether the bank itself could not provide the necessary explanation in time.
Mistaken Risk Culture
Still, the doubt, in this case, is now with the American regulator. Credit Suisse is going to have to grind through the consequences of its actions. It has not left a good impression on anyone. It has once again given the appearance that is not managing its current restructuring, which is at a fragile stage, with much poise. None of this engenders trust or confidence.
It might be a well-meant symbol of the bank's new risk culture in that it wants to make sure that all issues have been convincingly solved before it goes ahead with something like the public disclosure of an annual report. But this kind of caution is misplaced. The bank's mishaps were because of activities the front line was engaged in and did not relate to financial disclosure per se.
