Credit Suisse Group AG’s dual financial crisis shares a common theme: a bank that looked the other way when warning signs protested to withdraw profitable corners of its business.
The Swiss bank with a large presence on Wall Street has been caught off guard since the end of February when $ 10 billion in complex investment funds it operated with finance company Greensill Capital were unraveled, despite years of internal warnings about the relationship.
Thereafter, he lent more than other banks in large, concentrated positions to Archegos Capital Management, managed by longtime client Bill Hwang. Although Archegos was named a customer of special interest, Credit Suisse acted more slowly than other banks and ended up on the wrong side of a fire sale.
The bank said on Tuesday it would levy a $ 4.7 billion levy on Archegos trading, which equates to more than a year’s profit. According to the person familiar with the bank, the damage to the Greensill damage can not be shown, but according to the preliminary evaluation in the bank, losses to Credit Suisse investors could amount to $ 1.5 billion.
In a statement, Credit Suisse CEO Thomas Gottstein said on Tuesday: ‘We are committed to addressing these situations. Serious lessons will be learned. ”