Credit Suisse suffers $ 4.7 billion from Archegos hedge fund scandal

Credit Suisse announced on Tuesday several departures of high-level staff and proposed a reduction in its dividend because it weighs heavy losses from the Archegos Capital saga.

The Swiss lender now expects a pre-tax loss in the first quarter of around 900 million Swiss francs ($ 960.4 million), after assuming 4.4 billion Swiss francs in the wake of the scandal.

“The significant loss of our Prime Services business linked to the failure of a US-based hedge fund is unacceptable,” CEO Thomas Gottstein said in a business update.

Investment bank CEO Brian Chin and chief risk and compliance officer Lara Warner will be stepping down with immediate effect, the bank said.

Last week, Credit Suisse revealed that it expected heavy losses following the collapse of US hedge fund Archegos Capital. The bank was forced to get rid of a significant amount of shares to sever ties with the ailing family office.

The management board also waived its bonuses for fiscal year 2020, the bank announced on Tuesday, President Urs Rohner waiving his “president” of 1.5 million Swiss francs.

At its AGM on April 30, Credit Suisse will now propose a dividend of 0.10 Swiss francs gross per share with the amended remuneration ratio.

“Following in particular the important question of hedge funds based in the United States, the Board of Directors modifies its proposal for the distribution of dividends and withdraws its proposals on the variable remuneration of the Management Board”, declared the Swiss lender in an update. trading day.

He has suspended his share buyback program and said he has no intention of resuming share purchases until he returns to his target capital ratios and restores his dividend.

Last month the bank announced a reshuffle of its asset management business and a premium suspension as it sought to contain the damage caused by the collapse of UK supply chain finance firm Greensill Capital. .

The Council has launched two separate investigations, to be conducted by third parties, into the Greensill and Archegos sagas, committing to “not only focus on the direct issues arising from each of them, but also to reflect on the broader consequences. and lessons learned. ” “

Chin will be replaced as head of the investment bank on May 1 by Christian Meissner, currently co-head of the international investment banking advisory in wealth management at Credit Suisse and vice-president of investment banking.

Joachim Oechslin has been appointed acting chief risk officer and Thomas Grotzer acting global chief compliance officer effective Tuesday. All three will report to CEO Gottstein.

“In combination with the recent issues regarding supply chain finance funds, I recognize that these cases have raised serious concerns among all of our stakeholders. Together with the Board of Directors, we are fully committed to remedying these situations. Serious lessons will be learned, “Gottstein said in a statement.