Por Brenna Hughes Neghaiwi
ZURICH, Apr 22 (Reuters) – Credit Suisse on Thursday announced a first-quarter pre-tax loss of 757 million Swiss francs, slightly less than the group anticipated as a billion-dollar hole through the The collapse of the US investment fund Archegos overshadowed an excellent quarter of its banking activity.
Excluding the impact of 4.4 billion francs and other important elements, the bank said that the profit before tax would have been 3.6 billion francs, which would have represented the bank’s best operating quarter in at least a decade.
The net loss of 252 million francs contrasts with an average estimate of 815 million francs in a survey compiled by the bank itself among 17 analysts.
The entity said it was going to raise capital by issuing convertible securities in 203 million shares.
“The loss we reported this quarter, due to the (US fund) issue, is unacceptable,” Chief Executive Thomas Gottstein said in a statement. “We hope that our successful MCN placement today will further strengthen our balance sheet and allow us to support momentum in our core franchise.”
Credit Suisse has become the bank most affected by the exposure to Archegos, which collapsed as it failed to satisfy the margin calls – minimum guarantees for risk operations – from intermediary banks in financial markets.
Credit Suisse still anticipates a residual impact of approximately 600 million Swiss francs by Archegos in 2021. The bank had already exited 97% of related positions.
This case, plus the downfall of another client, Greensill Capital, has triggered internal and external investigations and the removal of a number of executives.
US competitors, some of whom rushed out of financial positions when Archegos collapsed, made gains that beat forecasts for the first quarter.
(Reporting by Brenna Hughes Neghaiwi; Editing by Michael Shields; Translated by Tomás Cobos)