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.
NEW MARKET: The partnership opens up India to the Dutch company, which already has a strong hold in the semiconductor market of South Korea, Taiwan and China ASML Holding NV entered into a partnership agreement with Tata Electronics Pvt Ltd aimed at ramping up India’s goal to develop domestic chip-manufacturing capabilities. The Dutch company’s technology would help power Tata Electronics’ planned 300 millimeter (mm) semiconductor foundry in Gujarat, according to a joint statement from the two companies on Saturday. The signing of a memorandum of understanding coincides with a visit by Indian Prime Minister Narendra Modi to the Netherlands, which is looking to deepen bilateral relations with New Delhi. ASML, whose top customers include Taiwan Semiconductor Manufacturing Co (台積電) and Samsung Electronics Co, makes lithography machines that can print
Tokyo Electron's Taiwan unit today said in a written response that it respects the judicial process, takes the court ruling seriously and would not appeal in the Taiwan Semiconductor Manufacturing Co (TSMC, 台積電) trade secrets case. Last month, a court fined the Taiwan unit of Japan's Tokyo Electron NT$150 million (US$4.74 million) in a case involving trade secrets related to TSMC's sensitive chip technology.
ROUGH RECORDS: Bonds in Japan, as well is in New Zealand, Australia and the US, are seeing the effects of a nervy market as stock exchanges across Asia edge down A deepening slump in Japanese government bonds added fuel to the selloff in global debt markets as rising oil prices stoked inflation fears and pushed yields to multi-decade highs. Japan’s 30-year yield yesterday surged as much as 20 basis points to the highest level since the tenor’s debut in 1999, before paring some of the move. Shorter-maturity Japanese debt was also under pressure, underscored by weak demand at a sale of five-year notes that offered a record-high coupon of 2 percent. Concerns over inflation and government spending rippling through markets including the US, Australia and New Zealand are being amplified in Japan,
Wall Street is licking its chops over an unprecedented slate of massive initial public offerings (IPOs) set to arrive in the coming months, beginning with Elon Musk’s Space Exploration Technologies Corp (SpaceX) next month. That is expected to be followed by artificial intelligence (AI) rivals OpenAI and Anthropic PBC. The trio of mega listings, each eyeing valuations around US$1 trillion or more, constitutes a heady period of elevated risk and reward. SpaceX is targeting an IPO that would raise up to US$80 billion — about double the funds generated from all IPOs last year. OpenAI and Anthropic are eyeing IPOs raising US$60 billion. “We’re
RSS