Switzerland’s second largest bank Credit Suisse on a branch’s building in downtown Geneva.
Fabrice Coffrini/AFP via Getty Images
Credit Suisse on Tuesday announced how much it has lost from the meltdown of Archegos Capital Management, as two high-ranking executives announced their resignations.
Credit Suisse said it will record a charge of 4.4 billion francs ($4.7 billion) in the first quarter and said Brian Chin, the chief executive of the investment bank, and Lara Warner, the chief risk and compliance officer, will step down.
Credit Suisse said it is going to take a loss of roughly 900 million francs before tax in the first quarter, as the margin call offset what it called a very strong performance in its investment bank business and growing profits in all three of its wealth-management businesses.
Credit Suisse is one of many banks to have extended credit to Archegos, the family office run by former hedge-fund manager Bill Hwang, to buy a basket of U.S. media and Chinese internet stocks. Shares of ViacomCBS fell in after-hours trade on Monday, as Credit Suisse unloaded shares in the U.S. broadcaster as well as shares in Vipshop and Farfetch, according to published reports.
Japanese bank Nomura has said it is going to lose about $2 billion, while Goldman Sachs and Morgan Stanley are expected to escape relatively unharmed, as they were the first to start selling Archegos holdings.
Credit Suisse also cut its dividend by two-thirds to 0.10 francs per share and halted its plan to resume share buybacks.
Credit Suisse also is handling the aftermath of the collapse of the supply-chain funds from Greensill Capital. It said it will provide an update in the next few days, and it launched separate investigations into both the Archegos and Greensill situations.
“The significant loss in our Prime Services business relating to the failure of a U.S.-based hedge fund is unacceptable. In combination with the recent issues around the supply chain finance funds, I recognize that these cases have caused significant concern amongst all our stakeholders,” said Chief Executive Thomas Gottstein in a statement. “Serious lessons will be learned. Credit Suisse remains a formidable institution with a rich history.”
Credit Suisse’s stock wavered between small gains and losses on Monday, but it is down roughly 20% since it first admitted it would see a big hit from Archegos.
