Credit Suisse First Boston's (CSFB) securitization business in Japan could suffer as a result of disciplinary action from the Financial Supervisory Agency (FSA), the country's financial regulator, according to Japanese media.
The FSA is expected to revoke the banking license of Credit Suisse Financial Products (CSFP), the group's derivatives arm, and prohibit CSFB in Tokyo from offering new products in fields including derivatives and loan securitization for one year.
The expected sanctions are the result of a six-month inquiry by the FSA into Credit Suisse's marketing of derivatives-based products to help Japanese clients hide their losses. The FSA has charged that Credit Suisse took advantage of loopholes in Japanese accounting rules to help clients stave off realizing losses. It has already recommended sanctions, but Credit Suisse was given the chance to argue its case at a hearing set for last Friday.
Loss of CSFP's banking license and a ban on some operations by other member companies might lead Credit Suisse to temporarily scale back its Japan presence, said sources. A CSFB spokesman in Tokyo declined to comment on the matter before the hearing. VC