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Thomas Gottstein, Managing Director of Credit Suisse Group AG, made controlling risk-taking one of his first actions after starting his role last year. This was not enough to prevent two big explosions: at Archegos Capital Management and Greensill Capital.
The bank’s shareholders are bracing for a multibillion-dollar blow following an inflammatory sell-off of positions held by hedge fund Archegos and analysts downgraded its stock on Tuesday due to reputational damage.
Shares of the Swiss bank fell 2% as investors estimated the extent of the damage. Its shares are now down 10% for the year, even as shares of Crosstown rival UBS Group AG are up 15%.
Credit Suisse has not said exactly how large the loss would be from the liquidation of positions in the fund, led by former Tiger Asia director Bill Hwang. He is expected to say more this week, according to a person familiar with the matter. In a profit warning Monday, he said the losses could be “very large and significant” to his first quarter results.
Another banking victim emerged on Tuesday when the securities business of Mitsubishi UFJ Financial Group Inc. said it could lose $ 300 million due to its exposure to a US client, which it did not identify by its last name. The bank is the largest in Japan and the transactions took place in one of its overseas subsidiaries.
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