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Source: Credit Suisse Group AG
Source: Credit Suisse Group AG
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Executives at Credit Suisse Group AG are considering replacing chief risk officer Lara Warner after a series of mistakes at the bank resulted in losses of up to billions of dollars, people knowledgeable about the matter said.
The bank is expected to give investors an update on the impact of its exposure to the Archegos Capital Management collapse and the fallout for Warner and other senior executives this week, said the people, who asked not to not be identified by describing private plans. Chief executive Thomas Gottstein is expected to stay, the people said.
A spokesperson for Credit Suisse declined to comment.
Gottstein took over in February 2020 following a spy scandal that killed his predecessor and promised a clean slate for 2021 after inheritance issues marred his first year. Instead, the company has been overwhelmed by repeated failures in oversight, including major successes in the collapse of Greensill Capital and the turmoil of Archegos. The explosions left analysts wondering if Credit Suisse had a systemic problem with risk management, and investors faced another quarter of losses.
Credit Suisse is the worst performing bank stock in the world so far this year, as the successful start to its investment banking business was overshadowed by the bank’s exposure to Greensill and Archegos.
A $ 140 million loan to financier Lex Greensill’s company is now in default, and a $ 10 billion pool of funds the asset management unit managed with his company is being wound up.
Before the final blow of this case could be counted, the leaders had to look to the impending blow of the collapse of Bill Hwang’s Archegos. The loss resulting from Hwang’s opaque and leveraged transactions could run into the billions, according to people familiar with the matter. Collectively, the banks affected by Archegos’ transactions could be Until $ 10 billion, analysts at JPMorgan estimated.
Last month’s two crises brought additional scrutiny to Warner, after a long string of other mistakes in investment banking and beyond. From exposure to Luckin Coffee Inc.’s fraud to a $ 450 million write-down on a stake in York Capital Management, continued damage to the lender’s reputation has increased management scrutiny.
The bank’s 1.5 billion Swiss francs ($ 1.6 billion) share buyback program is at risk of being halted for the second time – after being halted at the start of the pandemic last year – and losses could put pressure on the bank’s dividend payout. S&P Global Ratings downgraded its outlook for the bank to negative, from stable to concerns about risk management.
According to JPMorgan, a decline in profits of more than $ 5 billion would start to put pressure on Credit Suisse’s capital position. Swiss regulator FINMA has increased Credit Suisse requirements as part of its Pillar 2 cushion, after the bank warned it could suffer a loss due to liquidation of supply chain finance funds.
In its first reshuffle Last year, Gottstein elevated Warner to the head of risk and compliance. This promotion made her perhaps the oldest woman in the bank and reinforced the role of risk director that Tidjane Thiam entrusted to her in 2019, with the mission of solving the problems inherited from the past. She joined Credit Suisse as an equity analyst in 2002 and held several senior research positions until she became Chief Financial Officer and Chief Operating Officer of the investment bank in 2010.
– With the help of Ruth David and Marion Halftermeyer
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