Credit Suisse Group said the company will issue new shares as Archegos Capital Management's losses offset strong growth in the first quarter, showing the "damage" caused by Archegos' bankruptcy to Credit Suisse .
(Photo source: unsplash)
On Thursday (April 22), the bank said the notes it issued could be converted into stocks within six months to deal with losses and damage to its capital position caused by new fees imposed by Swiss financial regulators. The bank said it had only a small percentage of its exposure to Archegos as of Wednesday (April 21). The company's expenses incurred by Archego in the first quarter were as high as US$4.7 billion (about RMB 30.48 billion), and a loss of US$655 million (about RMB 4.25 billion) will be reflected in the second quarter financial report.
On Thursday, Finma, the Swiss financial regulator, said it initiated law enforcement procedures on how the bank handles Archegos' risks.
By assets, Credit Suisse Group, as the second largest bank in Switzerland, has revenue second only to UBS Group (UBS Group), with revenue rising 31% to about US$8.3 billion (about RMB 53.83 billion), due to the surge in customer activity in the market. The bank's loss for the quarter was 252 million Swiss francs (approximately 1.784 billion yuan).
Credit Suisse Investment Bank's revenue increased by 80%, mainly driven by corporate transactions and sales of stocks and bonds. Credit Suisse said its wealth management business (not reported as a separate department) brought about $4.23 billion (about 27.436 billion yuan) in revenue, a 3% increase over the same period last year.
Credit Suisse is the biggest hit among Archegos lenders, a family-owned American investment company that used borrowed money to bet on several stocks. When Archegos fails to meet margin requirements, other banks also lose money, but they are able to exit positions faster. Weeks after the fund's problems came, Credit Suisse warned that the collapse of another bank client, Greensill Capital , with which Credit Suisse , could cause significant losses.
Finma also said it initiated law enforcement procedures for Greensill Fund. The double blow of Archegos and Greensill is the biggest test the bank has experienced over the years, and this is precisely at the time of a change of leadership. Thomas Gottstein took over a year ago and his ex Tidjane Thiam was forced to leave after the bank was found surveillance of a recently resigned executive.
The bank's long-time chairman Urs Rohner will retire after the annual general meeting next week. He will be replaced by an outsider, António Horta-Osório, CEO of Lloyds Banking Group PLC.
Mr Gotstein said on Thursday that the losses of Arcegos were unacceptable. The bank cut dividends and laid off heads of risk, investment banking and equity departments. Its board of directors and regulators are investigating the reasons for the error.
Credit Suisse said it is strengthening risk controls for the main brokerage departments serving Archegos, adding that it is expected to reduce the business size of the hedge fund services.
Credit Suisse shares have fallen 29% since the end of February due to its problems and weakening capital position. The company said a major indicator of disaster resilience, its common stock Tier 1 Capital ratio, fell to 12.2% from 12.9% at the end of December. On Thursday, the company said it was allocating about 203 million new shares to investors through convertible notes to bring the ratio back to 13%.
(Special article on Canadian and American Finance, plagiarism will be prosecuted)
# Credit Suisse #, #Financial Report#, #Archegos#
Author: Zhang Fuzi
Editor: Master Liu
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-