Por Brenna Hughes Neghaiwi y Matt Scuffham
Zurich, Apr 6 (Reuters) – Credit Suisse Group AG announced an estimated loss of 4.4 billion Swiss francs ($ 4.7 billion) on Tuesday from its relationship with Archegos Capital Management LP, suspended a share buyback program and cut its dividend. proposed.
The Swiss bank, which has sold more than $ 2 billion worth of shares to end exposure to the troubled fund, also said its chief risk officer, Lara Warner, and Brian Chin, the bank’s chief investment banking officer, would leave their charges.
Christian Meissner will be appointed director of the investment bank effective May 1, Joachim Oechslin will become interim chief risk officer and Thomas Grotzer will be interim global director of regulatory compliance.
“The significant loss in our Prime Services business related to the bankruptcy of a US-based mutual fund is unacceptable,” Credit Suisse CEO Thomas Gottstein said in a statement. “Important lessons will be learned. Credit Suisse remains a formidable institution with a rich history.”
Warner and Chin are paying the price for a year in which Credit Suisse’s risk management protocols have come under close scrutiny, with two major relationships damaging the group, charging the bank with losses that analysts at JPMorgan Chase & Co estimate they could add up to $ 7.5 billion.
Archegos, a private investment vehicle of former hedge fund manager Sung Kook “Bill” Hwang, collapsed late last month when his leveraged bets on stocks in certain media companies collapsed. Credit Suisse and other banks, which acted as Archegos intermediaries, had to rush to sell the shares they had as collateral and undo the operations.
The Archegos episode came a few weeks after the disappearance of another important client of the Swiss bank: the British financial firm Greensill. Credit Suisse had traded funds that financed Greensill’s operations. Warner’s role has also come under scrutiny in the wake of the company’s collapse.
“Obviously, heads are rolling. After an explosion like this, there is always tighter control,” said Jason Teh, chief investment officer at Vertium Asset Management in Sydney.
Credit Suisse had lost a lot of money and its price will have a hard time recovering, according to Teh.
Credit Suisse’s price has fallen by around 25% in the last month as investors weigh the impact on the bank’s results and credibility, overshadowing an otherwise strong start to the year.
These episodes have also increased pressure on Gottstein, who has been trying to steer Credit Suisse away from more negative headlines, ranging from a spy scandal that toppled his predecessor Tidjane Thiam to a $ 450 million write-off for a fund investment. .
(Reporting by Matt Scuffham in New York, Brenna Hughes Neghaiwi and John Revill in Zurich; Additional reporting by Tom Westbrook in Singapore; Editing by Ira Iosebashvili and Edwina Gibbs)