London (CNN Business)The collapse last month of US hedge fund Archegos Capital cost Credit Suisse nearly $4.7 billion and two of the bank’s top executives their jobs.
The Swiss bank said Tuesday that it was likely to report a pretax loss of 900 million Swiss francs ($959 million) for the first quarter of this year after taking a charge of 4.4 billion Swiss francs ($4.7 billion) in respect of the failure of Archegos. Credit Suisse (CS) said that its top investment banker Brian Chin and chief risk officer Lara Warner would both be leaving the bank. Other members of the executive board will not receive bonuses for the 2020 financial year, and board chairman Urs Rohner will give up 1.5 million Swiss francs ($1.6 million) in compensation.
Thomas Gottstein, who became CEO last year, will remain in his job.
“The significant loss … relating to the failure of a US-based hedge fund is unacceptable,” Gottstein said in a statement. “Serious lessons will be learned. Credit Suisse remains a formidable institution with a rich history.”
Hedge fund meltdown: Elizabeth Warren suggests regulators should've seen it comingRead MoreCredit Suisse also said it would slash its dividend and suspend share buybacks.Archegos imploded in March after it used borrowed money to build massive positions in stocks including media companies ViacomCBS (VIACA) and Discovery (DISCA). Credit Suisse and Japan’s Nomura (NMR) were among the major banks exposed to losses.Archegos is the second major stumble for Credit Suisse in recent weeks. Earlier in March, it froze $10 billion in investment funds connected to failed UK supply chain finance firm Greensill Capital, which provided cash advances to companies owed money by customers.Credit Suisse said in a statement that its involvement with both Archegos and Greensill “require substantial further review and scrutiny.”
“The board of directors has launched investigations into both of these matters which will not only focus on the direct issues arising from each of them, but also reflect on the broader consequences and lessons learned,” it added.— This is a developing story and will be updated
Source: edition.cnn.com