The implosion of
family investment firm hedge fund Archegos Capital Management last month has cost embattled Credit Suisse almost $4.7 billion in losses, and the termination of several of the bank’s top executives.
The Swiss bank was among the hardest hit from the collapse of Bill Hwang’s Archegos, after suffering a significant loss in its unit that services hedge funds. That loss has now been confirmed to be upwards of $4.7 billion, as Credit Suisse announced it will likely report a pretax loss of $959 million in the first quarter of 2021 – a substantial loss for a company that posted net income of $2.9 billion for all of 2020.
In addition, Credit Suisse also revealed that it will terminating its top investment banker Brian Chin, as well as its chief risk officer Lara Warner. The remaining members of the bank’s executive board will not receive bonuses for 2020, meanwhile board chairman Urs Rohner will have to forego $1.6 million in compensation.
In order to increase capital following the serious Archegos financial blow, Credit Suisse also announced that it will discontinue its share buyback program and pay a decreased dividend via a combination of capital and retained earnings. Following the collapse of Hwang’s hedge fund, Credit Suisse shares have fallen by almost a quarter since the beginning of March, but regained some of the losses as of recent.
Information for this briefing was found via Bloomberg. The author has no securities or affiliations related to this organization. Not a recommendation to buy or sell. Always do additional research and consult a professional before purchasing a security. The author holds no licenses.