Credit Suisse Group AG’s double financial crisis shares a common theme: a bank looking the other way when warning signs were holding back in the profitable corners of its business.
The Swiss bank with a large presence on Wall Street has been caught by surprise since the end of February, when $ 10 billion in complicated investment funds it held with Greensill Capital collapsed, despite years of internal warnings about the relationship.
He then lent more than other large, concentrated banks to Archegos Capital Management, led by longtime client Bill Hwang. Although Archegos was marked as a customer of special interest, Credit Suisse acted more slowly than other banks and ended up on the wrong side of a fire sale.
The bank said on Tuesday it would charge $ 4.7 billion in trade with Archegos, the equivalent of more than a year. Although he did not give a number on Greensill’s claims, a preliminary assessment by the bank says that the losses for Credit Suisse investors could reach $ 1.5 billion, according to a person familiar with the bank.
In a statement on Tuesday, Credit Suisse CEO Thomas Gottstein said: “We are fully committed to addressing these situations. Serious lessons will be learned. ”