Credit Suisse Q1 write-downs of $5.3B drives $2.1B loss

Switzerland's second-largest bank said it also had net write-downs of 5.3 billion francs ($5.3 billion) for big buyout loans and mortgage securities.

It was the first time the bank, Switzerland's second largest, had posted a loss in the subprime crisis that has caused its crosstown rival UBS AG to write down $37.4 billion in assets because of bad investments in U.S. mortgage securities.

For the fourth quarter of 2007 Credit Suisse posted a revised net profit of $536 million.

"Our first-quarter results are clearly unsatisfactory," Credit Suisse Chief Executive Brady Dougan said, but he said other operations of the bank did well.

Credit Suisse is the first of the major European investment banks to report the quarter, but others have warned investors to brace for more writedowns.

Germany's Deutsche Bank AG has said it expects to post $3.98 billion in mark-downs for buyout loans and mortgage securities, while UBS expects a net loss of $12.36 billion because of its subprime exposure.

"You make assumptions about how low securitized assets can go, and yet what is bad can still get worse because the underlying assets are still falling," said Cubillas Ding, a London-based senior analyst at financial research firm Celent.

"As a whole, the industry will need to relook at pricing practices of complex derivatives," he said. "Something's obviously broken the risks involved and the controls to address those vulnerabilities are not properly aligned."

Credit Suisse said it has continued to reduce exposure to risk in the market and that other areas of its operations performed well