Credit Suisse replaces executives after reporting big loss from Archegos.
Credit Suisse announced Tuesday that it would replace its investment bank head and head of risk and compliance after losses from its stake in Archegos Capital Management, the collapsed hedge fund, totaled nearly $ 5 billion.
The Zurich-based bank is in turmoil after a series of disasters that have damaged its reputation and are likely to diminish its global clout. Credit Suisse also warns of the risks that can lurk in the financial system as bankers and investors seek returns when interest rates are at rock bottom and stock values are already frothy.
Credit Suisse detailed the financial impact of its dealings with Archegos for the first time on Tuesday, stating that it would post a loss of CHF 900 million for the first quarter after a charge of CHF 4.4 billion or CHF 4.7 billion US dollars in connection with the hedge was posted fund. The losses were higher than some estimates.
Brian Chin, CEO of Credit Suisse investment bank, will leave the company on April 30th. Lara Warner, chief risk and compliance officer, will resign immediately, the bank said.
Credit Suisse senior executives will be waiving their 2020 and 2021 bonuses, the bank said. Credit Suisse will also be canceling plans to buy back its own shares in order to boost the share price. However, the bank, eager to allay questions about its general health, said its capital is still at levels that are considered acceptable.
Credit Suisse shares fell by more than 2 percent in Zurich trading early Tuesday. They have lost a quarter of their value since the beginning of March.
Thomas Gottstein, CEO of Credit Suisse since last year, said the bank would hire outside experts to investigate what led to the “unacceptable” loss of Archegos and the bank’s stake in Greensill Capital, which collapsed last month be.
Credit Suisse’s asset management unit oversaw $ 10 billion in funds that Greensill packaged on the basis of funding from companies, many of which had poor credit ratings.
“Serious lessons are learned,” said Gottstein.