Credit Suisse Group takes $4.7-billion Archegos hit, cuts payouts

Risk chief Warner, investment bank head Chin to leave

Credit Suisse Group AG will take a 4.4 billion franc ($4.7 billion) writedown tied to the implosion of Archegos Capital Management and replace more than half a dozen executives in response to the firm’s worst trading debacle in over a decade.
 
The charge will result in a pretax loss of about 900 million francs for the first quarter, the bank said in a statement Tuesday, putting it on track for its second straight net loss. Credit Suisse scrapped bonu­ses for top executives, cut its dividend and suspended share buybacks to protect its capital. Investment bank head Brian Chin and Chief Risk Officer Lara Warner are leaving.

 
Chief Executive Officer Thomas Gottstein vowed he will draw “serious lessons” from the Archegos loss and the collapse of Greensill Capital last month as they leave him with little room for further missteps. The firm is the worst-performing major bank stock in the world this year as a strong first two months for its investment bank business are being overshadowed by its exposure to the failed firms.
 

“I recognise that these cases have caused significant concern amongst all our stakeholders,” Gottstein said Tuesday. “Together with the board of directors, we are fully committed to addressing these situations. Serious lessons will be learned.”

 
Credit Suisse rose 1.8 per cent at 12:18 p.m. in Zurich trading, paring losses this year to 9.3 per cent. The bank’s $2.25 billion perpetual bonds rose about 2 cents on the dollar to 110 cents, although the notes are still trading below levels seen before the Archegos blow-up.
 
In addition to the Archegos writedown, the bank may need to set aside 2 billion francs over the coming years for litigation tied to Greensill, analysts Kian Abouhossein and Amit Ranjan at JPMorgan Chase & Co wrote in a note.
 

CS sells $2.3 bn of stocks tied to Archegos
 

Credit Suisse Group AG unloaded about $2.3 billion worth of stocks tied to the Archegos Capital blowup more than a week after some rivals dumped their shares and skirted losses.

The Swiss bank hit the market with block trades tied to ViacomCBS, Vipshop Holdings Ltd and Farfetch, a person with knowledge of the matter said.