A "shredding party" in which former employees of Credit Suisse in Tokyo destroyed incriminating documents may lead to the banking giant losing its Japanese derivatives licence, it emerged yesterday. Japan's financial supervisory authority has concluded a seven-month inquiry into allegations of wrongdoing and will rule on the penalty within days.

It is thought Credit Suisse has been cleared of the most serious charge, that its Tokyo derivatives arm engaged in illegal transactions on behalf of recession-hit Japanese client-firms in order to disguise the true state of those firms' financial affairs. Such transactions, Credit Suisse sources have long claimed, were a version of legitimate tax planning and tolerated by the once all-powerful ministry of finance.

Credit Suisse maintains that the "tobashi" deals - where losses are hidden, sometimes by using complex derivative transactions - had been encouraged by Japanese bureaucrats until recently.

Had it not been for the "shredding party" relating to far less serious offences, Credit Suisse sources suggested, there would have been no case to answer. The less serious offence of breaching "firewall" regulations - which require not only that different activities be housed in different companies, but also that functions such as legal support and human resources be separated - has been compounded by the actions of at least seven employees - now dismissed - who destroyed documents showing Credit Suisse had not observed the letter of the law.

Yesterday, it seemed likely that the derivatives subsidiary, Credit Suisse Financial Products (CSFP), might lose its licence in Japan.

Given that CSFP was last year merged with another part of Credit Suisse's Tokyo operation, the question is whether the authorities will administer the symbolic punishment of de-licensing it, or whether it will pursue the unit's successor.