The head of Credit Suisse Group AG’s investment bank, Brian Chin, will have to leave as part of a wider shock to the Zurich-based lender, which was hit hard by the collapse of Archegos Capital Management.
Chin’s departure will be announced as soon as Tuesday, according to people familiar with the matter who asked not to be identified because the moves have not been made public.
Bank leaders are also discussing the possibility of replacing Lara Warner, the chief risk officer, while sparing CEO Thomas Gottstein, as they explain Archegos-related losses that could reach billions. Warner will have to leave the firm, the Financial Times reported.
Archegos, a US hedge fund that defaults on margin obligations, could cause losses on Credit Suisse in the market according to people with knowledge of the subject. The firm has acknowledged that the losses will be significant and is expected to inform investors this week. Reuters reported that the update will arrive on Tuesday. The firm is also planning a review of its core brokerage business.
Chin was promoted to CEO of the investment bank last year when Gottstein merged the unit with commercial operations following the departure of former CEO Tidjane Thiam. The restructuring was a victory for Chin, who helped transform the business of a perennial by-producer for much of Thiam’s tenure into a key profit contributor. In 2016, Chin was appointed executive director of world markets and admitted to the executive board of the bank.
A bank representative declined to comment on Chin’s departure and other moves. Chin did not immediately respond to requests for comment. Credit Suisse representatives did not immediately respond to calls for comment on FT’s Warner report.
Read more: Credit Suisse weighs in to replace the head of risk in the future executive shake-up
Gottstein took over in February 2020 following an espionage scandal that ended with his predecessor. He pledged to make a clean list for 2021, but the firm has been overwhelmed by repeated oversight deficiencies, including the huge successes of the Greensill Capital collapse and the Archegos turmoil.
The explosives have left analysts wondering if Credit Suisse has a systemic problem in risk management and investors are facing another quarter of losses. The bank’s share buyback program of 1.5 billion Swiss francs ($ 1.6 billion) runs the risk of being stopped for the second time (after being stopped for the first time at the start of the pandemic last year) and losses could put pressure on the bank’s dividend distribution.
Also on Monday, Credit Suisse began unloading shares linked to the Archegos explosion, more than a week after some rivals abandoned their shares and lost losses.
The Swiss bank reached the market with blockchain operations linked to ViacomCBS Inc., Vipshop Holdings Ltd. and Farfetch Ltd., which amounted to more than $ 2 billion at current prices, said one person with knowledge of the matter. The shares are trading substantially lower than they were last month before the implosion of Archegos, Bill Hwang’s family office.
The shares of the three companies declined in post-market trading, as didlisted shares of Credit Suisse.
– With the assistance of Sridhar Natarajan, Ambereen Choudhury and Drew Singer
(Updates with FT, as reported by Reuters from the third paragraph.)