One month after it disclosed pricing errors that shocked investors and industry observers, Credit Suisse Group warned Thursday that it will likely post a first quarter loss due to huge writedowns on debt securities, including MBS. Switzerland's second largest bank said it had written down $2.65 billion during the fourth quarter of last year and the first three months of 2008. Despite the pricing errors that forced it to restate fourth quarter results, a slew of new write-downs in March -- coming as the secondary markets siezed up -- are likely to blame for pushing the firm into the red. "Credit Suisse was profitable through the end of February," it said in a press statement. "However, in light of the difficult market conditions in March, at this time, Credit Suisse believes it is unlikely to be profitable in the first quarter." Should the firm post a quarterly loss, it would be the first since 2003. Shares in the company were down nearly 8 percent in pre-market trading on Thursday, to $46.09. Credit Suisse first warned of mispricing activity in February, and said that it had since determined that pricing errors were "the result of intentional misconduct by a small number of traders," who have since been fired or suspended. The brouhaha has clearly tarnished the company's image. Per Bloomberg:
"This is clearly embarrassing for Credit Suisse and further damages the reputation that it had worked so hard to improve after years of reckless risk taking," said Peter Thorne, a London-based analyst at Helvea SA, in a note. ... "There seems to be chaos at Credit Suisse," said Robert Minde, an analyst at BHF Bank AG in Frankfurt. "There is a lack of necessary controls. More negative surprises could follow."
CEO Brayd Dougan suggested the firm was putting new management and control structures in place, although the company did not provide details on specific actions being taken. "This incident is unacceptable and it does not represent the high standard of Credit Suisse," he said. "Our overall control framework remains sound. We are taking strong action to remediate and move forward." For more information, visit Disclosure: The author held no positions in CS when this story was originally published. HW reporters and writers follow a strict disclosure policy, the first in the mortgage trade.