Credit Suisse, the Swiss investment bank, reported its first quarterly loss for nearly five years yesterday after asset writedowns reached $5.2 billion (£2.6 billion).

Switzerland’s second-largest bank said that losses for the first quarter hit a worse-than-expected SwFr2.5 billion (£1.2 billion), compared with SwFr3.5 billion profit in the first three months of last year.

Brady Dougan, the chief executive of Credit Suisse, described the bank’s results as clearly unsatisfactory but said that the group had substantially reduced its exposures to the damaged credit market.

Asset writedowns of $5.2 billion on leveraged finance and structured products added to the $3.1 billion already announced for 2007. Compared with its larger rival, UBS, which has announced $37.4 billion in asset writedowns, Credit Suisse’s losses total $8.3 billion.

Oil is the key to world recovery

The shock of $140 oil has created inflationary and deflationary pressures that threaten world economy and policy tools

• Former President Bush energy adviser says oil is running out

Background

• Oil is the key to world recovery

• Banks may need to pump billions into scheme

• UK economic growth weakest for three years

Related Internet Links

• Full credit crunch coverage

Background

• Happy days are over for UK households

• Banks restrict mortgages by brokers

• Credit crunch halves lending at Nationwide

• JPMorgan to cut Bear Stearns jobs

• George Soros: Crunch will bite deeper in UK

Related Links

• Price-riggers put a dent into Credit Suisse

• Citigroup writes off another $15.2 billion

The bank said that it had cut its exposure to credit-related assets by 41 per cent since the end of last year, with SwFr20 billion of exposure remaining to leveraged finance, SwFr3 billion to US mortgages and SwFr700 million to mortgage-backed collateralised debt obligations.

Mr Dougan said that he could not guarantee that there would not be further writedowns and refused to call the end of the credit crunch.

“A number of times people have seen a light at the end of the tunnel and it has been a train coming down the tracks,” he said.

Credit Suisse gave warning in March that it was unlikely to record a first-quarter profit because of the continued fall in some markets.

“The forced selling by hedge funds created distressed market prices in certain asset classes, triggering substantial fair value reductions by banks,” the bank said yesterday.

A tough March came on top of SwFr2.8 billion in unexpected writedowns after a group of the bank’s traders deliberately mispriced some assets.

Mr Dougan said: “Most of our businesses performed well, with revenues near, or in some cases above, those in the first quarter of 2007.”

The private banking business, which includes wealth management and corporate and retail banking, reported an 8 per cent fall in pretax profit to SwFr1 billion.

A 13 per cent fall in pretax profit to SwFr860 million from wealth management was slightly offset by a 3 per cent increase in pretax profit in corporate and retail banking, to SwFr464 million.

Investment banking made a SwFr3.4 billion loss before tax, compared with a SwFr1.9 billion profit in the same quarter last year. Credit Suisse attributed the fall mainly to continued problems in fixed income.

The asset management business made a SwFr468 million pretax loss, down from a SwFr257 million profit last year, because of SwFr566 million of writedowns on securities bought from the bank’s money market funds.

It was also hit by lower profits from its private equity investments.

— Merrill Lynch is in talks with TPG, the US buyout firm, over ways in which the two companies can forge alliances, according to a report late last night.

Discussions, which are thought to have taken place this week, could lead to the buyout firm, previously known as Texas Pacific, investing in Merrill Lynch, if the bank should decide that it needs to raise more capital.

Merrill Lynch refused to comment. This week, the investment bank raised $7.3 billion (£3.65 billion) by selling bonds and preferred shares. It has said that it does not need additional capital.

Times Recommends

• Lenders face huge hit on mortgage fraud
• Mortgage rescue fund at the ready
• Zoom airline collapses and halts all flights