Credit Suisse asks shareholders to fill gap after Archegos fiasco

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Credit Suisse AG has asked shareholders for help to get it out of the mess over hedge fund Archegos and the collapse of trade credit group Greensill.


The Swiss bank posted a loss of CHF757mln (GBP592mln) in the quarter to end-March including losses of CHF4.4bn stemming from client Archegos, which last month had to liquidate US$20bn of assets overnight to stop it going bust.


The group added it is likely to take a further hit of CHF600mln from Archegos in the second quarter.


Credit Suisse added it had also taken a CHF30mln charge for the collapse of Greensill, which has sparked a probe in the UK into the lobbying of the government on the company’s behalf by former PM David Cameron.


Shareholders are being asked to put in US$1.9bn through the issue of two tranches of convertible loan notes to help restore its balance sheet ratios after the first quarter hit.


Thomas Gottstein, the chief executive, said: “Our results for the first quarter of 2021 have been significantly impacted by a CHF4.4 bn charge related to a US-based hedge fund.


“The loss we report this quarter, because of this matter, is unacceptable.”


Gottstein, who told reporters he was determined to stay on and right the listing ship, added that the bank had taken ‘significant steps’ to address this situation including strengthening control and risk functions and started independent investigations into these matters.


This includes shrinking its prime brokerage division that in future will just concentrate on its most important clients.


Bonuses for directors have been scrapped while the division’s boss Brian Chin and risk and compliance head Lara Warner have departed.


Incoming chairman Antonio Horta-Osorio joins from Lloyds Banking Group PLC (LON:LLOY) on 1 May to try to sort out the multitude of problems.


One of his first tasks will be to deal with Swiss financial watchdog, FINMA, which said today it had opened enforcement proceeding against the bank for its role in the Archegos and Greensill collapses.

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