Credit Suisse girds for billions in losses from Archegos Capital hit

Credit Suisse Group AG hadn’t finished the probe of its last crisis when the newest one hit.

The Swiss bank expects its loss tied to the implosion of Archegos Capital Manag­ement to run into the billions, according to people with knowledge of the matter. The firm spent Monday trying to calm its shell-shocked staff while facing heat from investors already reeling from the bank’s exposure to Greensill Capital’s collapse earlier this month.

March’s blowups may wipe out more than a year of profits for the bank and threaten its stock buyback plans, as well as adding to the reputational hit from other missteps. With the shares posting the only decline among Europe’s major banks in 2021 and a new chairman starting next month, Chief Executive Officer Thomas Gottstein is facing questions over whether he and risk chief Lara Warner have a handle on the bank’s exposures.

“Risk control at every level in this bank must be examined and changes made where there are deficiencies,” David Herro, chief investment officer at Harris Associates, one of the biggest investors in the bank, said in an email. “But I state the obvious?”

The bank has said warned it faces “highly significant” losses tied to Archegos. Analysts at Berenberg pegged the hit at 3 billion Swiss francs, on top of 500 million francs from the Greensill issues. Gottstein — who’s been in almost constant fire-fighting mode since taking over about a year ago — attempted to calm senior bankers and traders in a call late Monday, according to people with knowledge of the matter. Speaking alongside investment bank head Brian Chin, he said the bank was still working to figure out the size of the hit and told bankers this was a time to pull together and not focus on the potential impact on pay.

Senior bankers questioned when Credit Suisse would learn from the incidents. Executives also said it’s too early to say if the dividend is at risk, one of the people said.

While Credit Suisse isn’t the only bank to face losses from the family office of former hedge fund manager Bill Hwang, it’s just the latest in a series of loan losses, writedowns and scandals that seem to occur at ever shorter intervals.