Credit Suisse Group AG yesterday said it had identified “material weaknesses” in its reporting procedures for the financial years 2022 and 2021, and is adopting a remediation plan.
For the two years, “the group’s internal control over financial reporting was not effective,” Credit Suisse said in its annual report. “Management has also accordingly concluded that our disclosure controls and procedures were not effective.”
The bank was forced to delay the release of its annual report from last week after US regulators raised last-minute queries. Credit Suisse did not specify whether those had been resolved.
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The material weaknesses identified relate to the failure to design and maintain effective risk assessments in its financial statements, the bank said.
“PwC, the independent registered public accounting firm that audited the financial statements for the year ended Dec. 31, 2022, included in this annual report, has issued an adverse opinion on the effectiveness of the Group’s internal control over financial reporting as of Dec. 31, 2022,” Credit Suisse said.
Meanwhile, Credit Suisse chairman Axel Lehmann is forgoing a payment of 1.5 million Swiss francs (US$1.64 million) for his first full year on the job, as the bank reported its worst annual performance since the 2008 financial crisis.
Lehmann, who took up the role in January last year, would not receive the standard fee that is usually paid on top of board members’ salaries, the bank’s compensation report published yesterday showed.
Lehmann was allocated compensation of SF3 million for the period from April last year to next month, and plans to propose taking lower total pay of SF3.8 million for the following pay period at the annual shareholder meeting. The bank also plans to increase the portion of the chairman’s compensation that is paid in shares to 50 percent from 33 percent.
In waiving his fees, Lehmann mirrors executive-board members who are not receiving a bonus for last year when the lender experienced record outflows of client funds and a slump in its share price amid concerns over its restructuring plans.
The bank cut its 2022 pool for all employees by about half, setting aside only SF1 billion, down from SF2 billion the previous year.
Credit Suisse disclosed it would make another substantial loss this year and is in the middle of a complicated restructuring that includes carving out its investment bank and selling off businesses that do not connect with its key wealth unit. It is also reducing costs by cutting 9,000 jobs.
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