Credit Suisse Group AG’s double-barrier financial crisis shares a common theme: a bank looking the other way when warning signs argued for withdrawing from the lucrative spheres of its business.
The Swiss bank with a large Wall Street presence has been shocked since late February when $ 10 billion was unraveled in complicated investment funds with financing firm Greensill Capital, despite years of internal warnings about the relationship.
He then lent more than other banks in large, concentrated positions to Archegos Capital Management, led by longtime client Bill Hwang. Although Archegos was singled out as a special interest customer, Credit Suisse acted more slowly than other banks and ended up on the wrong side of selling fires.
The bank said Tuesday it would take a $ 4.7 billion charge on the Archegos trade, equivalent to more than a year of profit. While he has not given any numbers on Greensill’s damages, a preliminary assessment at the bank says losses for Credit Suisse investors could reach $ 1.5 billion, according to someone familiar with the bank.
In a statement on Tuesday, Credit Suisse chief executive Thomas Gottstein said: “We are fully committed to tackling these situations. Serious lessons will be learned.”