(Reuters) – Credit Suisse Group on Tuesday announced an estimated charge of 4.4 billion Swiss francs ($4.7 billion) from its relationship with Archegos Capital Management LP, suspended a share buyback programme and cut its proposed dividend.
Following are reactions to the development.
MICHAEL KUNZ, ANALYST AT ZUERCHER KANTONALBANK
“An individual case has ruined the otherwise successful work of the bank as a whole in the first quarter. At least – in our opinion – personnel consequences have now been taken.
The main damage, however, has been inflicted on shareholders, who have to make do with a lower dividend and a suspended share buyback.
In view of the bank’s vulnerability to risk….it does not seem appropriate to us to recommend bets on the securities of CS Group.”
ANDREAS VENDITTI, ANALYST AT BANK VONTOBEL
“CHF 4.4 bn Archegos charges are at the higher end of the range. However, the 1Q21 pre-tax loss is limited to CHF 0.9 bn thanks to very strong operating results. While the short-term impact seems less severe than feared, the full consequences from the reputational loss will only be visible over time.
“CEO Gottstein is quoted saying “serious lessons will be learned”. In addition to the Executive Board changes, we look forward to hear about the “broader consequences” of the Board’s investigations.”
NEW YORK (Reuters) – Credit Suisse Group AG will on Tuesday detail losses from its relationship with Archegos Capital Management LP after dumping over $2 billion worth of stock to end exposure to the troubled investor, two sources familiar with the matter said.
The episode, which analysts have said could cost the Swiss bank several billion dollars, is also expected to result in the departures of Chief Risk Officer Lara Warner and Brian Chin, the bank’s investment banking head, the sources said.
Credit Suisse and Archegos declined to comment. Warner and Chin did not respond to requests for comment.
The two executives are paying the price for a year in which Credit Suisse’s risk management protocols have come under harsh scrutiny, with two major relationships turning sour in quick succession, saddling the bank with what JPMorgan Chase & Co analysts estimate could add up to $7.5 billion.
Archegos, a private investment vehicle of former hedge fund manager Sung Kook “Bill” Hwang, fell apart late last month when its debt-laden bets on stocks of certain media companies unraveled. Credit Suisse and other banks, which acted as Archegos’ brokers, had to scramble to sell the shares they held as collateral and unwind the trades.
While sources have said some banks, including Goldman Sachs Group Inc, Morgan Stanley and Deutsche Bank AG, managed to exit the trades without taking a hit, others have ended up with losses. Japan’s Nomura Holdings Inc has flagged a possible $2 billion loss, for example. Nomura declined to comment.
For Credit Suisse, the Archegos episode came just weeks after the demise of another major client – the British finance firm Greensill. Credit Suisse had marketed funds that financed Greensill’s operations. Warner’s role has come under scrutiny in the aftermath of that firm’s collapse as well.
Credit Suisse’s share price has fallen by a quarter in the past month as investors assess the hit to the bank’s bottom line and credibility, overshadowing an otherwise strong start to the year. The episodes have also put pressure on Chief Executive Thomas Gottstein who has been trying to move Credit Suisse on from another string of bad headlines, spanning a spy scandal that ousted predecessor Tidjane Thiam to a $450 million write-down on a hedge fund investment.
UNWINDING THE TRADES
Hwang, a former Tiger Asia manager, ran into trouble following a March 24 stock sale by media company ViacomCBS Inc. Archegos was heavily exposed to ViacomCBS, sources said, and the slide in stock set off alarm bells at its banks, which called on the fund for more collateral.
When the firm could not meet the demand, the banks started selling the collateral, which included shares of Baidu Inc and Tencent Music Entertainment Group, among others.
While some banks were able to offload their collateral earlier, Credit Suisse still had shares left. On Monday, it offered 34 million shares of ViacomCBS priced between $41 to 42.75; 14 million American depository receipts of Vipshop Holdings Ltd between $28.50 and $29.50; and 11 million shares of Farfetch Ltd, priced between $47.50 and $49.25 in secondary offerings, a source familiar with the situation said.
The shares were the remaining holdings tied to Archegos that Credit Suisse needed to sell before tallying up losses, the source said.
ViacomCBS shares, which traded at a record of $101.97 in March, closed down 3.9% at $42.90 in regular trading. Vipshop was down 1.19% at $29.78, while Farfetch shares fell nearly 6.1% to $49.69.
(Reuters) – Leon Black, co-founder of private equity firm Apollo Global Management Inc, would not stand for re-election as chairman of the Museum of Modern Art (MoMA), the New York Times reported on Friday, citing people with the knowledge of the decision. bit.ly/3tRxSRY
MoMA did not immediately respond to a Reuters request for comment.
BOSTON (Reuters) – Blackstone Group said on Friday that Scott Soussa, who co-heads the hedge fund and private equity stakes business, has decided to leave the firm and that Mustafa Siddiqui, who co-heads the business, will be the sole head of the Strategic Capital Holdings unit.
Soussa, a senior managing director in the company’s Blackstone Alternative Asset Management unit (BAAM), is leaving for another opportunity but has agreed to remain at Blackstone until the end of the year.
Siddiqui, also a senior managing director in Blackstone’s BAAM unit, has served as co-head of the business, known as the GP Stakes platform, alongside Soussa. Previously he worked in Blackstone’s Private Equity Group, where he led the firm’s private equity investment activities across the energy sector in Europe, the Middle East and Africa.
“We are incredibly grateful to Scott for his significant contributions in building our successful stakes business,” said Blackstone President Jon Gray, adding that he was promoting Siddiqui and naming firm veteran Mike Nash to a new role. “Our stakes business has tremendous momentum partnering with world-class GPs and we are quite excited about what’s to come,” Gray told Reuters ahead of an announcement of the changes.
Nash, who co-founded Blackstone Real Estate Debt Strategies, will become chairman of the GP Stakes platform. The business oversees $7.4 billion in assets.
The unit makes minority investments in a general partner’s underlying management company. Some of its most prominent successes include Senator Investment Group, New Mountain Capital, Francisco Partners and Leonard Green.
Blackstone is the world’s biggest investor in hedge funds and its BAAM unit manages $79 billion in assets. It has been expanding this year.
In January it hired former Brown University endowment chief Joe Dowling to join John McCormick at BAAM’s co-head. Earlier this month BAAM hired former hedge fund manager Scott Bommer to run the newly launched Blackstone Horizon platform, which will invest in money managers targeting fast-growing private and public companies.
(Reuters) – GameStop Corp said on Tuesday its chief customer officer Frank Hamlin will resign from the company by March 31, pointing to a deepening of changes driven by its new biggest shareholder, Chewy.com co-founder Ryan Cohen.
This is the second executive departure at GameStop since it tapped Cohen to spearhead a transition to e-commerce. Chief Financial Officer Jim Bell is stepping down this month.
The company, which is expected to report fourth quarter results after the market close on Tuesday, garnered eyeballs after a social media frenzy in January, motivated in part by anger at shortsellers, triggered a rally in its shares.
Hamlin will become entitled to the payments, rights and benefits associated with a ‘Good Reason’ resignation under his employment agreement with GameStop, it said in a regulatory filing on Tuesday.
Three executives of the NDC in the Eastern region have been involved in a near-fatal accident while returning from a campaign tour in Afram Plains.
The victims, Hackman Kabore, Regional Organizer, Richard Etornam Nyarko, Deputy Regional Organizer and Michael Akorli, Deputy Regional Communication Officer sustained injuries and were rushed to the Atibie Government Hospital where their conditions stabilized and subsequently referred to Eastern Regional Hospital in Koforidua.
The accident occurred on Saturday, November 28, 2020, on Kwahu Adawso to Kwahu Tafo road.
Information gathered indicate that the executives were returning to meet the national chairman Ofosu Ampofo after campaigning with the General Secretary of the Party Johnson Asiedu Nketia at Afram Plains South and North Constituencies.
The speeding party-branded Nissan Pick-Up vehicle driven by Mr Etornam Nyarko reportedly veered off the road after hitting an unmarked bumpy stretch which made the vehicle somersault five times and landed in a ditch.