Sources say FOX Business Charlie Gasparino Credit Suisse could make further management changes as it explores ties with Archegos and Bill Hwang.
Credit Suisse Group AG has amassed more than $ 20 billion in investment exposure related to Archegos Capital Management, but the bank struggled to monitor it before the fund was forced to liquidate many of its major positions, according to people familiar with the matter. with the case.
The U.S. family investment firm on a stockpile increased in the run-up to the March crash, but parts of the investment bank did not fully implement the systems to keep up with the rapid growth of Archegos.
The people familiar with the bank said that Credit Suisse CEO Thomas Gottstein and chief risk officer Lara Warner, who recently left the bank, first became aware of the bank’s exposure to Archegos. Enough mr. Gottstein, enough mr. Warner had previously been aware of the fund as a key client, these people said.
ARCHEGOS ‘BILL HWANG MAKED A HISTORY BEFORE LOSING IT ALL, SHOW A FOX BUSINESS INVESTIGATION
A spokesman for Credit Suisse declined to comment.
The exposure shows for the first time the extent of Credit Suisse’s relationship with Archegos, which was unraveled late last month. Credit Suisse reported a $ 4.7 billion loss, reduced its dividend and said Warner, its chief investment officer and other staff would leave. Credit Suisse also faces questions from regulators in the US and Europe about its relationship with Archegos and the windstorm.
Archegos, a US family investment firm of former Tiger Asia manager Bill Hwang, has placed big bets on some stocks with money borrowed from banks. When some major positions were overturned and Archegos could not reach offices, it caused one of the biggest sudden losses in Wall Street history.
Bill Hwang, who appeared in 2012, emigrated to the US after high school in South Korea and led one of the largest hedge funds focused in Asia. PHOTO: EMILE WAMSTEKER / BLOOMBERG NEWS
Archegos spread his bet over half a dozen banks. Others, including Nomura Holdings Inc. and Morgan Stanley, also reported huge losses. Credit Suisse lent more to Archegos than other lending banks and was one of the last to go out, The Wall Street Journal reported earlier.
Within the bank, top management now knows that the so-called supposed exposure, or the underlying value of the assets it managed on behalf of Archegos, was more than $ 20 billion, people familiar with the matter said.
Some of the bank familiar with the exposure of Archegos thought it was a fraction of the roughly $ 20 billion, one of the people familiar with the matter said. ‘
People familiar with the matter did not partially protect Credit Suisse from exposure to Archegos, as it had not yet put in place a system that monitored in real time how much risk a position created for the bank.
WHO IS ARCHEGOS FUND MANAGER BILL HWANG?
The people, known as dynamic margins, are not fully implemented in the division that oversees Archegos’ investments in Credit Suisse. The bank planned to migrate the Archegos positions to the system.
Archegos made a large portion of its investments through a derivative instrument called a total return variable. These are contracts mediated by Wall Street banks that allow users to take the gains and losses of a portfolio of shares or other assets in exchange for a fee. Through these swaps, Archegos has a major stake in ViacomCBS Inc., Discovery Inc. and took a handful of other media and technology companies while pre-posting limited funds, essentially borrowed from Credit Suisse and other Wall Street banks.
| Ticker | Safety | Last | Alter | Alter% |
|---|---|---|---|---|
| CS | CREDIT SUISSE GROEP AG | 10.38 | +0.09 | + 0.83% |
Because the share price of many of Archegos’ investments changed rapidly, Credit Suisse could not fully monitor the bank’s own risk without these systems used by many other Wall Street banks, people familiar with the matter said.
In the days before banks began to quickly block the download of large blocks of Archegos’ shares or investments related to the swap transactions, some people in Credit Suisse clashed over how and how aggressively to sell. Goldman Sachs Group Inc. and Morgan Stanley moved relatively large blocks of assets relatively quickly as the extent of the hedge fund’s losses became clear.
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Credit Suisse reports Thursday’s earnings in the first quarter, when it is expected to publish more details about the overall damage Archegos has had on its finances.
The Archegos crisis erupted a few weeks after Greensill Capital, a British finance company deeply entangled in Credit Suisse, filed for bankruptcy and left the bank on the brink of bankruptcy.
Credit Suisse said the dealings with Archegos and Greensill need to be thoroughly investigated and investigated. ‘It is said that the board has put together a crisis team and hired outside help to investigate.
The investigation will also investigate how the bank, after pouring large sums of money into risk control and supervision over the past few years, has allowed itself to become involved in both situations. In the case of Greensill, the bank has reviewed the relationship several times over the past few times, but has expanded its business with the company.