Credit Suisse in turmoil after top executives leave after Hedge Fund Scandal worth $4.7 Billion

Credit Suisse Group is a leading financial services company advising clients in all aspects of finance, across the globe and around the clock. Founded in 1856 with headquarters in Zurich, Switzerland, Credit Suisse has operations in over 50 countries. The Credit Suisse Group’s purpose is at the core of everything we do. Credit Suisse is known for its management of accounts from the NSDAP, its strict bank–client confidentiality, and banking secrecy. Besides this Credit Suisse helps to address challenges facing young people and communities through our multifaceted social commitments. Working with selected partner organizations,it supports initiatives that generate a positive economic and social impact in the areas of financial education and financial inclusion. In addition to funding, these partners benefit from the skills and expertise of our employees, who can devote up to four days per year to volunteering to support social projects

On April 6 2021 this year, Credit Suisse revealed that it was expecting heavy losses in the wake of the meltdown of U.S. hedge fund Archegos Capital. Credit Suisse has said it expects to lose $4.7 billion in the first quarter of 2021 due to its involvement in the events surrounding US-based hedge fund Arches. Arches used the borrowed money to build massive positions in stocks including media companies ViacomCBS (VIACA) and Discovery (DISCA), and was unable to pay back lenders when share prices dropped. The Swiss lender now expects a first-quarter pre-tax loss of around 900 million Swiss francs ($960.4 million), after taking a charge of 4.4 billion Swiss francs as a result of the scandal has led to a  significant loss to its prime services business, resulting in the failure of a U.S.-based hedge fund bank which as a consequence of this was forced to dump a significant amount of stock to sever its ties to the troubled family office.

Earlier in March, it froze $10 billion investment funds connected to failed UK supply chain finance firm Greensill Capital, which provided cash advances to companies owed money by customers. The missteps have weighed on the bank’s stock. Shares in Credit Suisse have fallen by more than 10% this year, and have lost roughly a quarter of their value since the start of the coronavirus pandemic. As a result of this Credit Suisse has suspended its share buyback program and reduced its proposed dividend as well.  

The implosion of the hedge fund, which managed the fortune of investor Bill Hwang, has triggered calls for increased regulation of US firms that invest on behalf of families or a small number of clients. Japan’s Nomura (NMR) was also among the banks exposed to losses when Archegos collapsed. It has warned of losses of up to $2 billion. Another Japanese lender, Mitsubishi UFJ Securities (MBFJF), is expecting a loss of about $300 million. this has resulted in Financial regulators across the world are monitoring the collapse of the New York-based billionaire Bill Hwang’s personal hedge fund. Following the failure of the fund to meet these margin commitments, Credit Suisse and a number of other banks are in the process of exiting these positions

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