Photographer: Stefan Wermuth / Bloomberg
Photographer: Stefan Wermuth / Bloomberg
Credit Suisse Group AG unloaded nearly $ 2 billion in shares linked to the outbreak of Archegos Capital Management in the second sale of this block, as the bank recorded most of its exposure in the first quarter.
Stock offers included Discovery Inc. i Iqiyi Inc., which joins some Shares worth $ 2.3 billion linked to the debacle the bank sold last week, according to people familiar with the matter. Transactions follow a torrent of similar transactions that had already been deleted Market value of $ 194 billion as New York banks in Zurich and Tokyo squandered capital bets leveraged by Bill Hwang’s family office.
Read more: Credit Suisse could face even more impacts from Archegos this quarter
Credit Suisse shares fell as the sale added to evidence that the collapse of Archegos could affect the bank beyond the first quarter, when it took a depreciation of 4.4 billion francs ($ 4.8 billion ), its worst commercial success in more than a decade. Although the Swiss bank has substantially reduced its exposure, transactions since the end of March were not included in the first quarter results, said a person familiar with the matter.
Credit Suisse fell to 2.2% in Zurich’s first operations and was 1.2% lower at 9:43 p.m. Shares have lost 15% this year, compared to double-digit gains from an index that includes their European peers.
A Credit Suisse spokesman declined to comment on the sale and whether the bank plans to make more such transactions.
Hwang’s private investment firm became the center of one of the largest margin calls of all time late last month and represented one of the most dramatic failures in risk management and supervision. of recent memory. The fall of Archegos will translate into $ 10 billion in losses for banks, according to analysts at JPMorgan Chase & Co. The debacle could attract regulatory control and possible fines for the banks involved, analysts said this week.
Read more: Archegos is produced through the bank hedge fund business
One of the people asked not to be identified in a private matter, Tuesday’s block operations, which were sold at the lower end, included 19 million Discovery Class A shares sold at 38.40 dollars. In addition, 22 million Discovery Class C shares were sold for $ 32.35, while a 35 million share of Iqiyi shares was $ 15.85.
The latest sale of Credit Suisse comes weeks after several rivals abandoned their shares to avoid losses. Although the company was one of several global investment banks that facilitated Archegos ’leveraged bets, it was slower than others to relax positions and had initially tried to reach some sort of stalled deal, as reported by people familiar with the matter.
The strategy failed as rivals rushed to reduce their losses. World banks, including Goldman Sachs Group Inc. and Deutsche Bank AG, have informed investors that they have ceded their positions linked to Archegos with little financial impact.
Credit Suisse has planned a review your hedge fund business. It has already announced plans to cut its dividend, suspend stock rewards and eliminate bonuses for top executives.
– With the help of Patrick Winters
(Updates on Credit Suisse shares from the third paragraph.)