Nomura Holdings Inc and Credit Suisse Group AG said they face potentially “significant” losses as some of the world’s biggest banks tally their exposure to the massive unwinding of leveraged equity bets by Archegos Capital Management LLC.
Lenders to Bill Hwang’s New York-based family office have been racing to contain the fallout after Archegos failed to meet margin calls last week.
The forced liquidation of more than US$20 billion of positions linked to Archegos has roiled stocks from Baidu Inc (百度) to ViacomCBS Inc, and cast a spotlight on the opaque world of leveraged trading facilitated by some of the biggest names on Wall Street.
Photo: Kiyoshi Ota, Bloomberg
Nomura shares ended down 16 percent yesterday, the biggest decline on record.
The company said in a statement that the estimated amount of its claim against an unnamed US client was about US$2 billion.
That client is Archegos, people familiar with the matter said.
The family office founded by Hwang, a former Tiger Management trader, was one of Nomura’s prime brokerage clients, one of the people said, without providing further details.
Credit Suisse said it was in the process of exiting positions after a US-based hedge fund defaulted on margin calls.
“While at this time it is premature to quantify the exact size of the loss resulting from this exit, it could be highly significant and material to our first-quarter results,” the bank said in an e-mailed statement, without naming the fund.
Credit Suisse shares were indicated about 7 percent lower before the official open of trading in Europe. The potential loss is the latest blow to the Swiss bank, already reeling from the Greensill Capital scandal and the write-down on a hedge fund stake and other hits last year.
Goldman Sachs Group Inc is telling shareholders and clients that any losses it faces from Archegos are likely to be immaterial, a person familiar with the matter said.
The New York-based bank’s loans to Archegos were fully collateralized and Goldman was among the first to begin reducing its exposure, the person said, asking not to be identified because the information is private.
The bank has exited most of its Archegos-related positions, the person added.
A media representative at Goldman declined to comment.
Morgan Stanley is also a prime broker to Archegos and was among the banks managing the sale of Archegos positions via block trades on Friday, wiping out US$35 billion from the values of bellwether stocks, ranging from Chinese technology firms to US media companies, people familiar with the matter said.
It is unclear whether Morgan Stanley faces losses, and it declined to comment.
Tencent Music Entertainment Group (騰訊音樂娛樂) yesterday announced a US$1 billion share buyback, days after the Chinese online music company was caught up as one of the names hit by the liquidation of Archegos holdings.
Tencent Music’s buyback plans represent 2.9 percent of the company’s market value.
The New York-listed firm’s stock slumped almost 20 percent on Friday.
Baidu could follow in Tencent Music’s footsteps. It has approximately US$2.78 billion outstanding share repurchase programs that it could use for buying back its shares, Citi analysts wrote in a note.
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