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Credit Suisse made $17.5 mn in Archegos fees in year before $5.4 bn losses

The lenders have collectively lost more than $10 billion in the fallout

Topics
Credit Suisse | Hedge funds

Agencies 

Credit Suisse
Photo: Bloomberg

Archegos, which was run by former hedge fund manager Bill Hwang, borrowed tens of billions of dollars from at least nine global banks to speculate on volatile stocks. The lenders have collectively lost more than $10 billion in the fallout.

According to a report by the Financial Times, despite extending billions of dollars of credit to Archegos, made just $17.5 million from the relationship last year. The low level of fees and high risk exposure have caused concern among the board and senior executives, who are investigating the arrangement, according to two people with knowledge of the process.

The bank’s management is particularly alarmed after being told that Hwang was not a private banking client of the group, suggesting there was little incentive to pursue his prime brokerage business, the people told FT. According to the news article, also demanded a margin of only 10 percent for the equity swaps it traded with Archegos and allowed the family office 10-times leverage on some transactions, according to people familiar with the trades and first reported by Risk.net.

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First Published: Tue, May 04 2021. 00:28 IST
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