Traders fear huge CSFB losses in Russian crisis

FEARS WERE mounting last night that Credit Suisse First Boston, a leading player in the Russian debt market, is facing huge losses as a result of the latest financial crisis.

Debt market sources said losses could range from $500m to $1.5bn. However, CSFB dismissed the speculation as "preposterous" and "way off beam".

A senior CSFB executive in New York said last night: "Anyone who is speculating about our positions doesn't know our positions. Only we know our positions. Until we know what form Monday's restructuring takes, it is premature to say what, if any, losses CSFB has sustained."

The executive said that in the event of Monday's restructuring having a material affect on the bank's financial position, it would make a statement.

The fears, which have sparked concern among staff in London, Zurich and New York that bonuses may be cut because of the dramatic impact on investment banking profits this year, came amid warnings from Moscow that some of the country's 20 leading banks could now fail.

Shares in Credit Suisse, its Swiss banking parent, have taken a battering in Zurich over the last few days. They fell nearly 4 per cent yesterday.

Knowledge of the losses is widespread in emerging market trading circles: traders said they believed them to be "substantial". "CSFB is haemorrhaging," said one Russian debt trader yesterday. "They have some horrible secondary positions." Another said: "They are the market leader: you would expect them to have suffered losses."

The bank, which was the first major Western investment bank to set up in Moscow after the fall of communism, is by far the biggest player in the $40bn Russian debt market. The firm employs 320 people in Moscow with satellite offices in Kiev and Tashkent.

Other Western investment banks have also been badly burnt over the past few days by the payment halt, although none have been hit to the same extent. The other major players in the short-term government debt market are ING Barings and JP Morgan.

Analysts say CSFB accounts for more than half of the foreign holdings of GKOs, the short-term rouble-denominated government bonds. Altogether, foreign banks are thought to account for a quarter of the total market.

The size of CSFB's losses would explain why the bank has been leading efforts to persuade the Russians to honour their obligations to foreign investors. The Russians withdrew their original proposals for restructuring their short-term debt obligations on Wednesday after being warned that they were highly discriminatory towards foreigners and would "permanently damage the Russian economy".

CSFB kept up its pressure on the Russian authorities yesterday with a further warning about the damage the planned debt restructuring would do to the banking system by keeping afloat banks that deserved to go to the wall.

Rival SBC Warburg was yesterday appointed to handle the debt restructuring.

The crisis yesterday spread to the Ukraine. Dealings on the Kiev foreign exchange were halted at the request of the central bank in a move expected to be followed by a devaluation in the country's currency, the hryvnia.

Start your day with The Independent, sign up for daily news emails
Arts and Entertainment
Wolf (Nathan McMullen), Ian (Dan Starky), The Doctor (Peter Capaldi), Clara (Jenna Coleman), Santa Claus (Nick Frost) in the Doctor Who Christmas Special (BBC/Photographer: David Venni)
tvOur review of the Doctor Who Christmas Special
News
peopleIt seems you can't silence Katie Hopkins, even on Christmas Day...
Arts and Entertainment
Left to right: Stanley Tucci, Sophie Grabol and Christopher Eccleston in ‘Fortitude’
tvSo Sky Atlantic arrived in Iceland to film their new and supposedly snow-bound series 'Fortitude'...
Arts and Entertainment
Kellie Bright as Linda Carter and Danny Dyer as Mick Carter

EastEnders Christmas specials are known for their shouty, over-the-top soap drama but tonight the show has done itself proud thanks to Danny Dyer.

PROMOTED VIDEO
ebooks
ebooksA year of political gossip, levity and intrigue from the sharpest pen in Westminster
Arts and Entertainment
Call The Midwife: Miranda Hart as Chummy
tvCall the Midwife Christmas Special
Sport
Laura Trott and Jason Kenny are preparing for the Commonwealth Games in Glasgow
sport
Arts and Entertainment
Sir Bruce Forsyth with Tess Daly in the BBC's Strictly Come Dancing Christmas Special
tvLouis Smith wins with 'Jingle Bells' quickstep on Strictly Come Dancing's Christmas Special
News
news
Arts and Entertainment
tv
Latest stories from i100
Have you tried new the Independent Digital Edition apps?
Independent Dating
and  

By clicking 'Search' you
are agreeing to our
Terms of Use.

iJobs Job Widget
iJobs Money & Business

Selby Jennings: Oil Operations

Highly Competitive: Selby Jennings: Our client, a leading European Oil trading...

The Jenrick Group: Night Shift Operations Manager

£43500 per annum + pension + holidays: The Jenrick Group: Night Shift Operatio...

SThree: Trainee Recruitment Consultant - LONDON

£20000 - £25000 per annum + OTE £40,000 + Car + Pension: SThree: SThree are a ...

SThree: Trainee Recruitment Consultant

£20000 - £25000 per annum + OTE £35K: SThree: We consistently strive to be the...

Day In a Page

Isis in Iraq: Yazidi girls killing themselves to escape rape and imprisonment by militants

'Jilan killed herself in the bathroom. She cut her wrists and hanged herself'

Yazidi girls killing themselves to escape rape and imprisonment
Ed Balls interview: 'If I think about the deficit when I'm playing the piano, it all goes wrong'

Ed Balls interview

'If I think about the deficit when I'm playing the piano, it all goes wrong'
He's behind you, dude!

US stars in UK panto

From David Hasselhoff to Jerry Hall
Grace Dent's Christmas Quiz: What are you – a festive curmudgeon or top of the tree?

Grace Dent's Christmas Quiz

What are you – a festive curmudgeon or top of the tree?
Nasa planning to build cloud cities in airships above Venus

Nasa planning to build cloud cities in airships above Venus

Planet’s surface is inhospitable to humans but 30 miles above it is almost perfect
Surrounded by high-rise flats is a little house filled with Lebanon’s history - clocks, rifles, frogmen’s uniforms and colonial helmets

Clocks, rifles, swords, frogmen’s uniforms

Surrounded by high-rise flats is a little house filled with Lebanon’s history
Return to Gaza: Four months on, the wounds left by Israel's bombardment have not yet healed

Four months after the bombardment, Gaza’s wounds are yet to heal

Kim Sengupta is reunited with a man whose plight mirrors the suffering of the Palestinian people
Gastric surgery: Is it really the answer to the UK's obesity epidemic?

Is gastric surgery really the answer to the UK's obesity epidemic?

Critics argue that it’s crazy to operate on healthy people just to stop them eating
Homeless Veterans appeal: Christmas charity auction Part 2 - now LIVE

Homeless Veterans appeal: Christmas charity auction

Bid on original art, or trips of a lifetime to Africa or the 'Corrie' set, and help Homeless Veterans
Pantomime rings the changes to welcome autistic theatre-goers

Autism-friendly theatre

Pantomime leads the pack in quest to welcome all
The week Hollywood got scared and had to grow up a bit

The week Hollywood got scared and had to grow up a bit

Sony suffered a chorus of disapproval after it withdrew 'The Interview', but it's not too late for it to take a stand, says Joan Smith
From Widow Twankey to Mother Goose, how do the men who play panto dames get themselves ready for the performance of a lifetime?

Panto dames: before and after

From Widow Twankey to Mother Goose, how do the men who play panto dames get themselves ready for the performance of a lifetime?
Thirties murder mystery novel is surprise runaway Christmas hit

Thirties murder mystery novel is surprise runaway Christmas hit

Booksellers say readers are turning away from dark modern thrillers and back to the golden age of crime writing
Anne-Marie Huby: 'Charities deserve the best,' says founder of JustGiving

Anne-Marie Huby: 'Charities deserve the best'

Ten million of us have used the JustGiving website to donate to good causes. Its co-founder says that being dynamic is as important as being kind
The botanist who hunts for giant trees at Kew Gardens

The man who hunts giants

A Kew Gardens botanist has found 25 new large tree species - and he's sure there are more out there