Credit Suisse cuts dividends after large losses on an American hedge fund customer. Two from the top management go on the day.
Published: Just updated
The major Swiss bank Credit Suisse announces a loss of 900 million Swiss francs in the first quarter of the year, corresponding to NOK 8.2 billion.
– This includes a cost of 4.4 billion Swiss francs (equivalent to 39.9 billion kroner, journ.anm.) As a result of a US-based hedge fund failed to meet the margin requirements, writes Credit Suisse in the earnings forecast.
Credit Suisse cuts dividends after the big loss. Investment bank manager Brian Chin and risk director Lara Warner will resign with immediate effect, the bank writes in a separate message on Monday morning.
The billion-dollar failure that may have wiped out the enormous family fortune
Hedge fund scandals
JP Morgan has estimated that banks could end up with losses of up to 10 billion dollars, equivalent to 86 billion kroner, according to Bloomberg, as a result of the incident.
Both Credit Suisse and Japanese Nomura announced on Monday last week that they could face “significant” losses in connection with “an American hedge fund” having broken the margin requirements associated with various positions. The exact amount has not been known. The two bank shares crashed on the stock exchange last week.
Archegos, which is led by manager Bill Hwang, is said to have broken the margin requirements for positions linked to a number of shares. It is said to have triggered forced sales worth billions of dollars, according to several media.
The forced sales have affected both the shares in which Archegos was involved and a number of banks in which Archegos was a customer.
Mitsubishi UFJ Financial has announced that they could have a loss of around 300 million dollars, equivalent to 2.6 billion kroner, related to a US client.
Stock market crash for major banks: Warns of huge losses after hedge funds were forced into giant sales
More trouble for the big bank
Credit Suisse has also had problems with the controversial fund Greensill Capital.
The London-based company Greensill Capital has received a lot of attention in the international financial press after the major bank Credit Suisse chose to break ties with the company. Among other things, the company has used former British Prime Minister David Cameron as an adviser.
The company has applied to be placed under administration (“files for administration”), according to the Financial Times.
Credit Suisse has frozen funds worth 10 billion dollars, equivalent to 85 billion kroner, after the big bank became concerned about the ties to the Indian-born British metal magnate Sanjeev Gupta. He is said to have relied on Greensill to expand his empire, the GFG Alliance, which has more than 30,000 employees and $ 20 billion in revenue.
FT: Greensill Capital requests to be placed under administration
The bank has announced that it would stop investors from buying and selling four private investment funds based on securities that Greensill is behind. The Wall Street Journal wrote that the bank was concerned about Greensill’s exposure to a single client, namely Gupta.
Credit Suisse allegedly froze the funds because some assets in them “are currently subject to significant uncertainty as to their exact valuation,” according to the WSJ.
Published: April 6, 2021 7:57 AM
Updated: April 6, 2021 08:26
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