FINMA probes Credit Suisse over Archegos blowout 

Credit Suisse took a major reputational and financial hit over Archegos. Keystone / Urs Flueeler

Swiss banking giant Credit Suisse is under the scrutiny of regulators over massive losses from the bankruptcies of British financial firm Greensill and US hedge fund Archegos. 

This content was published on April 22, 2021 - 10:48 

Switzerland’s Financial Market Supervisory Authority (FINMA) on Thursday opened enforcement proceedings against the bank over the Archegos losses. The regulator is investigating whether there were deficiencies in risk management. FINMA has appointed an investigator to probe the matter at the bank. It is also exchanging information with counterparts in Britain and the United States. 

The bank was already in the crosshairs of Swiss regulators over its investments in Greensill, an opaque firm issuing short-term corporate loans that was forced to scrap four funds and declare insolvency in March. Last week FINMA ordered the bank to take additional temporary and precautionary measures to reduce risks and capital surcharges. 

Credit Suisse on Thursday reported a net loss of CHF252 million ($275 million) for the first quarter.  The lender took a CHF4.4 billion charge to cover the damages related to Archegos and expects an additional CHF600 million in losses in the second quarter.  

This has forced the bank to issue new shares to raise around CHF1.8 billion to shore up its battered capital position. 

“The loss we report this quarter, because of this matter, is unacceptable,” Credit Suisse CEO Thomas Gottstein said in a statement.  

The scandal-driven losses robbed the bank of the opportunity of clocking one of its best quarters.  

The Wall Street Journal reported late Wednesday that Credit Suisse racked up over $20 billion in exposure due to the Archegos-related investments. The Swiss bank’s executives were informed only days before the fund’s implosion, according to the journal. 

The investment bank’s CEO Brian Chin and chief risk and compliance officer, Lara Warner, have both stepped down. Other executives are also said to have be facing the axe, according to media reports. 

Credit Suisse said in its quarterly earnings release that it would work closely with FINMA and all other relevant regulators.  

Credit Suisse took a major reputational and financial hit over Archegos. Keystone / Urs Flueeler

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