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Credit Suisse takes $4.7 billion hit from Archegos hedge fund scandal; execs step down
* Last week, Credit Suisse revealed that it was expecting heavy losses in the wake of the meltdown of U.S. hedge fund Archegos Capital.
* It took a charge of $4.7 billion as a result and now expects a first-quarter pre-tax loss of around $960.4 million.
* Investment Bank CEO Brian Chin and Chief Risk and Compliance Officer Lara Warner will step down from their roles with immediate effect.

Elliot Smith
PUBLISHED TUE, APR 6 20211:16 AM EDT
UPDATED TUE, APR 6 20216:17 AM EDT

Credit Suisse on Tuesday announced several high-level staff departures and proposed a cut to its dividend as it weighs heavy losses from the Archegos Capital saga.

The Swiss lender now expects a first-quarter pre-tax loss of around 900 million Swiss francs ($960.4 million), after taking a charge of 4.4 billion Swiss francs as a result of the scandal.

“The significant loss in our Prime Services business relating to the failure of a U.S.-based hedge fund is unacceptable,” CEO Thomas Gottstein said in a trading update.

Investment Bank CEO Brian Chin and Chief Risk and Compliance Officer Lara Warner will step down from their roles with immediate effect, the bank said.

Last week, Credit Suisse revealed that it was expecting heavy losses in the wake of the meltdown of U.S. hedge fund Archegos Capital. The bank was forced to dump a significant amount of stock to sever its ties to the troubled family office.

The executive board has also waived its bonuses for the 2020 financial year, the bank announced Tuesday, with Chairman Urs Rohner giving up his “chair fee” of 1.5 million Swiss francs.

At its AGM on April 30, Credit Suisse will now propose a dividend of 0.10 Swiss francs gross per share along with the amended compensation report.

“Particularly following the significant US-based hedge fund matter, the Board of Directors is amending its proposal on the distribution of dividends and withdrawing its proposals on variable compensation of the Executive Board,” the Swiss lender said in a trading update.

It has suspended its share buyback program and said it does not intend to resume share purchases until it has regained its target capital ratios and restored its dividend.

Credit Suisse shares gained 1.7% by late morning trade in Europe.

More details in https://www.cnbc.com/2021/04/06/credit-s...-down.html
Age old human behavior - No one wants to be the one to say NO when everyone else is making money. It is better to fail conventionally than succeed unconventionally.

Archegos indictment raises fresh questions over banks' risk management controls

Archegos defaulted in late March 2021 after the value of its trades sank and banks called in their credit lines, leaving global lenders, including Credit Suisse, Nomura Holdings, Morgan Stanley and UBS Group, with combined losses of around US$10 billion.

Alma Angotti, partner at risk management advisory firm Guidehouse and a former SEC enforcement official, said even though banks were lied to, regulators still may be looking at whether their risk management programs were inadequately designed or implemented.

“Maybe they didn’t have the appropriate scepticism to say this doesn’t make sense.”

https://www.businesstimes.com.sg/banking...t-controls