Credit Suisse said it marked down the value of asset-backed investments by $2.85 billion (€1.9 billion) in a move that wiped $1 billion from its net income.
The bank said it still expected to stay in profit in the first quarter of 2008 despite the charge.
The charges reflected "significant adverse first quarter 2008 market developments," Credit Suisse said today, sending its shares sharply lower. Trading in Credit Suisse shares fell over 7 per cent in early trading.
The bank said an internal review, which identified mismarkings and pricing errors by a small number of traders in its Structured Credit Trading business, was continuing.
Analysts said they were stunned by the announcement by Credit Suisse, which until now had been practically unblemished by the subprime debacle.
Credit Suisse also said it was assessing whether any portion of the markdowns could affect its 2007 results. The bank last week unveiled fourth-quarter net profit of 1.329 billion francs (€823 million).
The bank had only last week trimmed its full-year write-downs for 2007 linked to the subprime crisis to two billion Swiss francs.