Credit Suisse burns more than $20bn in Archegos positions

Photo: EPA

Credit Suisse Group is forced to take drastic measures to curb losses, mounted by a massive exposure to the troubled Archegos, Reuters reported. According to data, provided by media sources the leading Swiss bank had more than $20 billion of exposure to investments related to Archegos. The fund was forced to cut many of its long capital positions, including ones related to Credit Suisse, Wall Street Journal elaborated.

Credit Suisse posted a slightly smaller-than-flagged 757 million Swiss franc first-quarter pre-tax loss, as a multi-billion dollar hit from the collapse of US investment fund Archegos stymied a bumper trading quarter.

Parts of the bank had not fully implemented systems to keep pace with Archegos' fast growth when Archegos bets on a collection of stocks swelled leading up to its March collapse, the report said, citing unidentified people familiar with the matter.

Credit Suisse said it expects a residual impact of approximately 600 million Swiss francs from the US-based hedge fund scheme in 2021. It already had exited 97% of the related positions.

Chief Executive Thomas Gottstein and Lara Warner, the bank's recently departed chief risk officer, became aware of the Archegos exposure in the days leading up to the forced liquidation of the fund, the report said. Neither Gottstein nor Warner had been aware of the fund as a major client before, it said. Credit Suisse declined to comment on the WSJ report.

Switzerland's second-biggest bank has been reeling from its exposure to the collapse first of British fund Greensill Capital and then US investment fund Archegos within the course of one month.

Huge losses at Archegos last month prompted Credit Suisse to replace its heads of investment banking and of compliance and risk after it said it would book a $4.7 billion first-quarter charge from exposure to the stricken firm.

Similar articles

  • Commerzbank paves the way for 10,000 job cuts

    Commerzbank paves the way for 10,000 job cuts

    Germany’s Commerzbank announced it had reached an agreement with representatives of employees over planned job cuts aimed to reduce operating costs, Reuters reported. The Verdi labour union confirmed the information and elaborated that the issue concerned some 10,000 worldwide. The agreement is central to Chief Executive Officer Manfred Knof's plans to restructure and spur the nation's second-biggest listed lender and return it to profitability.