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Credit Suisse’s Archegos Exposure Was Reportedly Over $20 Billion

Last update April 22, 2021

Tyler Durden April 22, 2021 SNB & CHF

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Summary:
Just minutes after the SEC is reportedly “exploring how to increase transparency for the types of derivative bets that sank Archegos,” The Wall Street Journal reports that Credit Suisse Group AG had somehow allowed a massive exposure to investments related to Archegos Capital Management or more than billion. While the bank has said that its losses on the positions amounted to .7 billion, WSJ, citing people familiar with the matter, reports that Archegos’ bets on a collection of stocks swelled in the lead-up to its March collapse, but parts of the investment bank hadn’t fully implemented systems to keep pace with Archegos’s fast growth. Some inside the bank who were familiar with Archegos’s exposure had thought it was a fraction of the roughly billion

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Just minutes after the SEC is reportedly “exploring how to increase transparency for the types of derivative bets that sank Archegos,” The Wall Street Journal reports that Credit Suisse Group AG had somehow allowed a massive exposure to investments related to Archegos Capital Management or more than $20 billion.

While the bank has said that its losses on the positions amounted to $4.7 billion, WSJ, citing people familiar with the matter, reports that Archegos’ bets on a collection of stocks swelled in the lead-up to its March collapse, but parts of the investment bank hadn’t fully implemented systems to keep pace with Archegos’s fast growth.

Some inside the bank who were familiar with Archegos’s exposure had thought it was a fraction of the roughly $20 billion figure, one of the people familiar with the matter said.

As the ‘perp walk’ of various executives and risk managers at the historic Swiss bank grows longer, we suspect this is not the last we will hear, as Credit Suisse has said its dealings with both Archegos and Greensill need “substantial further review and scrutiny.”

Finally, we note none of this is really surprising given that, as we just detailed, Bloomberg on Wednesday published an anonymously sourced story laying the blame for the Archegos blowup at the feet of Parshu Shah.

Reportedly, thanks to a gutting of the compliance function at the bank, Shah, who served as the salesman in charge of nurturing the bank’s relationship with Archegos….had also been head of risk at the bank’s prime-services business.

So, no wonder he never got the tap on the shoulder…