Thursday , November 14 2024
Home / SNB & CHF / Credit Suisse Hires Former Prime Brokerage Head To Restore Business After Archegos Blowup

Credit Suisse Hires Former Prime Brokerage Head To Restore Business After Archegos Blowup

Summary:
After firing a raft of senior employees including its head of risk, Lara Warner, Credit Suisse has been struggling to move past a series of major risk-management failures that together could cost the bank billion, or more, though the final tally of losses from the Archegos blowup isn’t yet known as the bank weighs whether it should cover some client losses associated with the “low risk” trade-finance funds that collapsed earlier this year. Following reports that the bank took in only .5MM in fees from servicing the trade that led to the collapse of highly-levered Archegos Capital, the hedge fund that used highly leveraged billion to more than 0 billion via a string of bets with various prime brokers to amplify its bets on ViacomCBS and a host of

Topics:
Tyler Durden considers the following as important: , , , ,

This could be interesting, too:

Frank Shostak writes Assumptions in Economics and in the Real World

Conor Sanderson writes The Betrayal of Free Speech: Elon Musk Buckles to Government Censorship, Again

Nachrichten Ticker - www.finanzen.ch writes Bitcoin erstmals über 80.000 US-Dollar

Nachrichten Ticker - www.finanzen.ch writes Kraken kündigt eigene Blockchain ‘Ink’ an – Neue Ära für den Krypto-Markt?

After firing a raft of senior employees including its head of risk, Lara Warner, Credit Suisse has been struggling to move past a series of major risk-management failures that together could cost the bank $10 billion, or more, though the final tally of losses from the Archegos blowup isn’t yet known as the bank weighs whether it should cover some client losses associated with the “low risk” trade-finance funds that collapsed earlier this year.

Credit Suisse Hires Former Prime Brokerage Head To Restore Business After Archegos Blowup

Following reports that the bank took in only $17.5MM in fees from servicing the trade that led to the collapse of highly-levered Archegos Capital, the hedge fund that used highly leveraged $20 billion to more than $100 billion via a string of bets with various prime brokers to amplify its bets on ViacomCBS and a host of other tech and media stocks (many Chinese ADRs) while skirting reporting requirements, it has become apparent the bank’s leadership in that division is sorely lacking (both of the co-heads of the division were both sacked in the aftermath of the Archegos implosion).

So, Bloomberg reports that, in order to reorganize and “clean up” the bank’s prime brokerage business, it’s bringing back a familiar face: Indrajit Bardhan, a former head of the unit who left the bank three years ago in what BBG described as a “leadership shakeup”. Bardhan will return as a consultant to offer the bank some guidance as it seeks to reconstitute the potentially lucrative (but risky) business of serving hedge funds and family offices.

The Swiss bank hired Bardhan as a consultant, according to people with knowledge of the arrangement, who asked not to be identified because the matter is private. He was among a number of high-profile executives to exit in 2018. He relinquished his role as global head of prime services to Paul Galietto, who later rose to head of equities and then left last month after the bank posted $5.5 billion in losses tied to Archegos.

As BBG points out, the unusual decision to enlist a veteran of the bank (and one who apparently ran afoul of the leadership under former CEO Tidjane Thiam) reflects the desperate position Switzerland’s second-largest lender has found itself in. Bardhan was among a number of high-profile executives to exit in 2018. He relinquished his role as global head of prime services to Paul Galietto, who later rose to head of equities before being canned last month.

The unusual decision to enlist a veteran underscores the challenge the Zurich-based bank faces in rebuilding the potentially lucrative but risky business of catering to hedge funds and other sophisticated investors. It pared a number of experienced staffers years ago. And more recently the firm saw another raft of senior departures after the Archegos debacle, including the co-heads of the prime brokerage unit.

So far, Archegos alone has wiped out one year of profit for Credit Suisse, and with the Archegos situation not yet fully resolved, investors have started to question everything, from CEO Thomas Gottstein’s ability to manage the bank, to the board’s ability to supervise him. In another unusual move, the board sacked one of its own in the face of growing shareholder pressure ahead of its annual meeting.

We can’t help but wonder: Will CS bring back Tidjane Thiam to help offer some guidance to Gottstein?


Tags: ,

Credit Suisse Hires Former Prime Brokerage Head To Restore Business After Archegos BlowupDon’t miss posts anymore!
Subscribe to our newsletter!

Tyler Durden
Tyler Durden is a reference to the lead character in Fight Club. It's the pseudonym for Zero Hedge's key author(s) used to hide their identities.

Leave a Reply

Your email address will not be published. Required fields are marked *