The admission, less than a fortnight before its parent Credit Suisse was set to announce half-year results, came after rumours that Russia had defaulted on a bond payment due yesterday, sparking fears of a wholesale default.
Reports that other big banks had sustained serious losses as a result of the $40bn debt restructuring announced on Tuesday night sent bank shares tumbling worldwide.
With the crisis in Moscow deepening, stock markets around the world were again on the slide. The FTSE closed down 109 points at 5545.4, while in New York the Dow was off 65 at 8537.26. Equity markets in Europe and Asia were also showing big falls.
Particularly badly hit in the sell-off were some of the big US banks who are known to have been big players in the Russian debt market. Much of that debt is now virtually worthless following Tuesday's restructuring of the $40bn short-term government debt.
On Wall Street the biggest fallers included Chase Manhattan, Citicorp and Lehman who are all known to have been active in trading in Russian short-term debt.
Traders also said that Goldman Sachs, which earlier this week filed for a $30bn listing, was rumoured to have sustained big losses in Russia, as has Salomon Smith Barney.
Goldman said last night that its exposure was absolutely minimal and pointed out that the bank, which three weeks ago handled a first attempt at restructuring the GKO market, had said it had had a number of successful mandates out there.
"It is not surprising that competitors are seeking to undermine our success," said a Goldman spokesman.
The gloom in the banking sector was also compounded by the decision by the debt rating agency Standard & Poors to strip Deutsche Bank of its coveted Triple A status.
The decision reflected broader concerns about the bank's business mix and the failure to make a go of its attempts to build a global investment bank.
However, these subtleties were lost in markets which were very nervy about Russia. "There are a lot of rumours going around at the moment, said one trader. "The numbers go up and down like a yo-yo."
The Credit Suisse statement issued in Zurich yesterday said the bank would still announce a half-year profit of $754m for CSFB when it publishes its figures for the first six months on 9 September. However, it pointed that since then unaudited net profit had fallen to $500m for the year to date.
John Leonard, analyst at Salomon Smith Barney, said the figures implied that CSFB, one of the biggest players in the Russian debt market, had probably lost around $350m in the latest debacle.Reuse content