Credit score Suisse takes $4.7 billion hit from Archegos hedge fund scandal

A Swiss flag flies over an indication of Credit score Suisse in Bern, Switzerland


Credit score Suisse on Tuesday introduced a number of high-level employees departures and proposed a reduce to its dividend because it weighs heavy losses from the Archegos Capital saga.

The Swiss lender now expects a first-quarter pre-tax lack of round 900 million Swiss francs ($960.4 million), after taking a cost of 4.4 billion Swiss francs on account of the scandal.

“The numerous loss in our Prime Providers enterprise referring to the failure of a U.S.-based hedge fund is unacceptable,” CEO Thomas Gottstein mentioned in a buying and selling replace.

Funding Financial institution CEO Brian Chin and Chief Danger and Compliance Officer Lara Warner will step down from their roles with quick impact, the financial institution mentioned.

Final week, Credit score Suisse revealed that it was anticipating heavy losses within the wake of the meltdown of U.S. hedge fund Archegos Capital. The financial institution was compelled to dump a big quantity of inventory to sever its ties to the troubled household workplace.

The manager board has additionally waived its bonuses for the 2020 monetary 12 months, the financial institution introduced Tuesday, with Chairman Urs Rohner giving up his “chair price” of 1.5 million Swiss francs.

At its AGM on April 30, Credit score Suisse will now suggest a dividend of 0.10 Swiss francs gross per share together with the amended compensation report.

“Notably following the numerous US-based hedge fund matter, the Board of Administrators is amending its proposal on the distribution of dividends and withdrawing its proposals on variable compensation of the Government Board,” the Swiss lender mentioned in a buying and selling replace.

It has suspended its share buyback program and mentioned it doesn’t intend to renew share purchases till it has regained its goal capital ratios and restored its dividend.

Credit score Suisse shares hovered 0.1% under the flatline by mid-morning commerce in Europe.

One other scandal

Final month, the financial institution introduced a shakeup of its asset administration enterprise and a suspension of bonuses because it regarded to include the injury from the collapse of British provide chain finance agency Greensill Capital.

The Board has launched two separate investigations, to be carried out by third events, into the Greensill and Archegos sagas, vowing to “not solely concentrate on the direct points arising from every of them, but additionally mirror on the broader penalties and classes realized.”

Chin will likely be changed on the helm of the funding financial institution on Might 1 by Christian Meissner, at present Credit score Suisse’s co-head of worldwide wealth administration funding banking advisory and vice chairman of funding banking.

Joachim Oechslin has been appointed interim chief danger officer and Thomas Grotzer interim international head of compliance as of Tuesday. All three will report back to CEO Gottstein.

“Together with the current points across the provide chain finance funds, I acknowledge that these instances have prompted important concern amongst all our stakeholders. Along with the Board of Administrators, we’re totally dedicated to addressing these conditions. Severe classes will likely be realized,” Gottstein mentioned in a press release.

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