Credit Suisse Announces Massive Losses and Restructuring Amid Archegos and Greensill Debacle

Strategic Insights -

The Swiss bank Credit Suisse has been severely impacted by its heavy exposure to the collapsed investment fund Archegos and the supply chain lender Greensill. The bank reported losses of 4.4bn Swiss francs (£3.4bn) related to Archegos, with its investment bank under CEO Brian Chin acting as prime broker to Archegos funds. Credit Suisse also announced that its board will not receive bonuses, and its dividend has been cut by two-thirds. Two senior executives, Chin and Lara Warner, will step down from their roles. The bank's shares have fallen by 19% since 29 March, when the extent of the Archegos chaos became clear.

Key Takeaways:

  • Credit Suisse reported losses of 4.4bn Swiss francs (£3.4bn) related to Archegos, citing the collapse of the US hedge fund as the primary cause.
  • The bank's investment bank under CEO Brian Chin acted as prime broker to Archegos funds, lending large sums of money to allow it to build up bigger positions in the shareholdings of quoted companies.
  • Credit Suisse also announced that its loss exposure related to Greensill, a supply chain lender, will be disclosed in a few days, in addition to the £3.4bn losses from Archegos.
  • The bank's board will not receive bonuses for the financial year to 1 April, and its dividend has been cut by two-thirds, from 0.29 to 0.10 Swiss francs per share.
  • Two senior executives, CEO Brian Chin and Lara Warner, the chief risk and compliance officer, will step down from their roles.
  • Credit Suisse's role at the centre of the two prominent collapses shines a spotlight on potential problems with its risk management.
  • The Bank's shares have fallen by 19% since 29 March, when the extent of the Archegos chaos became clear.

Statistics:

  • £3.4bn: Credit Suisse's losses from the collapse of Archegos
  • 4.4bn Swiss francs: Credit Suisse's total losses related to Archegos
  • 19%: The decline in Credit Suisse's shares since 29 March
  • 1.2m: The fee forfeited by Urs Rohner, the chairman of Credit Suisse

Sources:

  • "Credit Suisse reports £3.4bn loss from Archegos collapse" by Jill Treanor, The Guardian, March 31, 2021
  • "Credit Suisse CEO and chief risk officer to leave" by Reuters, March 30, 2021
  • "Credit Suisse slashes dividend and cancels bonuses for board" by S. L. Stein, Bloomberg, March 30, 2021