Credit Suisse Group AG yesterday said that it had taken a US$4.7 billion hit from its links to troubled hedge fund Archegos Capital Management LLC, cut dividends and announced the departure of two senior executives.
The Swiss bank and Japan’s Nomura Holdings Inc last month warned that they could face significant losses due to their exposure to a US hedge fund forced to liquidate its holdings.
“The significant loss in our Prime Services business relating to the failure of a US-based hedge fund is unacceptable,” Credit Suisse chief executive officer Thomas Gottstein said in a statement.
Photo: Reuters
Bloomberg News has reported that the fund was little-known Archegos Capital Management, which sold more than US$20 billion in stocks from US media and Chinese companies as it sought to cover its obligations to its lenders.
Credit Suisse said that its pretax loss of 900 million Swiss francs (US$960 million) in the first three months of the year included SF4.4 billion related to “the failure by a US-based hedge fund to meet its margin commitments as we announced on March 29.”
Trading on margin is the practice of using borrowed funds to invest in financial assets such as stocks. It can be profitable for borrowers, as they are often only required to put down a small percentage in cash while the stocks serve as collateral for the lender.
However, large shifts in share prices can force borrowers to put up more money, that is to meet their margin commitments, or sell the shares and potentially lose more than their investment.
Credit Suisse also announced the departure of the head of its investment bank, and chief risk and compliance officer, while it pulled bonuses for senior executives and chopped its dividend.
The bank’s board of directors announced an investigation into the matter.
Credit Suisse also announced a separate probe into its supply chain finance funds, a reference to its exposure to the collapse of British finance firm Greensill Capital Ltd, which specialized in providing short-term financing to companies.
“The Archegos fallout ... has become a significant nightmare for Credit Suisse, and the bank has to take the right steps for its survival, as losses are just too big to digest,” AvaTrade analyst Naeem Aslam said.
Among the rows of vibrators, rubber torsos and leather harnesses at a Chinese sex toys exhibition in Shanghai this weekend, the beginnings of an artificial intelligence (AI)-driven shift in the industry quietly pulsed. China manufactures about 70 percent of the world’s sex toys, most of it the “hardware” on display at the fair — whether that be technicolor tentacled dildos or hyper-realistic personalized silicone dolls. Yet smart toys have been rising in popularity for some time. Many major European and US brands already offer tech-enhanced products that can enable long-distance love, monitor well-being and even bring people one step closer to
Malaysia’s leader yesterday announced plans to build a massive semiconductor design park, aiming to boost the Southeast Asian nation’s role in the global chip industry. A prominent player in the semiconductor industry for decades, Malaysia accounts for an estimated 13 percent of global back-end manufacturing, according to German tech giant Bosch. Now it wants to go beyond production and emerge as a chip design powerhouse too, Malaysian Prime Minister Anwar Ibrahim said. “I am pleased to announce the largest IC (integrated circuit) Design Park in Southeast Asia, that will house world-class anchor tenants and collaborate with global companies such as Arm [Holdings PLC],”
Sales in the retail, and food and beverage sectors last month continued to rise, increasing 0.7 percent and 13.6 percent respectively from a year earlier, setting record highs for the month of March, the Ministry of Economic Affairs said yesterday. Sales in the wholesale sector also grew last month by 4.6 annually, mainly due to the business opportunities for emerging applications related to artificial intelligence (AI) and high-performance computing technologies, the ministry said in a report. The ministry forecast that retail, and food and beverage sales this month would retain their growth momentum as the former would benefit from Tomb Sweeping Day
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