Credit Suisse CS -1.58%
Group AG said two executives in charge of its main brokerage unit will leave after losing $ 4.7 billion over the collapse of hedge fund Archegos Capital Management.
In an internal note on Monday, it was said that John Dabbs and Ryan Nelson will immediately leave the role of co-directors of major services and help the bank until mid-May for an orderly transition.
His departures come after Credit Suisse fired his top manager and head of the investment bank this month. Several other employees working in stocks and risk management also left.
Credit Suisse and other banks accumulated heavy losses when Archegos, a U.S. family-owned investment firm, was unable to meet margin calls on concentrated and large stock positions in late March.
Credit Suisse took a long time to relax its positions compared to other banks and was left with the strongest loss. It lent more to Archegos in relation to its size than other creditor banks, the Wall Street Journal previously reported.
In addition to staff departures, the bank has initiated an internal investigation into what went wrong. The investigation has focused on the bank’s main brokerage unit, which managed the relationship with Archegos and allowed the investor to accumulate substantial leverage positions in individual shares.
Credit Suisse and other banks sold Archegos what is known as full-return swaps, a type of contract that allows investors to have economic exposure to a stock without holding the underlying shares or disclosing their positions in the markets.
Dabbs has worked for Credit Suisse since 2009. Nelson joined in 2018 from Crosstown’s rival, UBS Group AG. Together, they led a shift in the core brokerage business that consisted of focusing on fewer clients to improve profits. Credit Suisse says it is one of the top four intermediaries in the United States, based on industry rankings.
The main brokerage units of the banks serve the hedge funds, helping them to trade, offering them credit and presenting them to external investors.
After disclosing Archegos ’$ 4.7 billion loss on April 6, Credit Suisse cut its dividend to conserve capital and chief executive Thomas Gottstein said“ serious lessons will be learned ”.
Archegos’ problems came just weeks after the collapse of another Credit Suisse client, Greensill Capital, with which the bank managed a $ 10 billion set of investment funds. Credit Suisse says the costs associated with these funds and a loan to Greensill could be significant, but has not given any figures.
Credit Suisse reports first quarter earnings on Thursday. In its April 6 statement, Credit Suisse said it expects to record a previous loss in the amount of about $ 1 billion to reflect the losses of Archegos.
Write to Juliet Chung at [email protected] and Margot Patrick at [email protected]
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