Credit Suisse Group AG’s double-barreled financial crisis presents a common theme: a bank that looked the other way when warning signs argued that it was pushing back the lucrative corners of its business.
The Swiss bank, which has a large presence on Wall Street, began to be occupied in late February when a $ 10 billion sophisticated investment fund was run, led by the financing company Greensill Capital, despite years of internal warnings about the relationship.
He then lent more than other banks to large, concentrated positions for Archegos Capital Management, led by Bill Hwang, a long-term client. Although Archegos was designated as a high-interest customer, Credit Suisse acted more slowly than other banks and got the fire on the wrong side.
The bank said on Tuesday it would have to account for $ 4.7 billion in costs for the Archegos trade, which equates to more than a year of profits. Although it has not reported any damage caused by Greensill, a preliminary assessment within the bank estimates that the loss suffered by Credit Suisse’s investors could reach $ 1.5 billion, a person skilled in the bank says.
Thomas Gottstein, CEO of Credit Suisse, said in a statement on Tuesday: “We are fully committed to dealing with these situations. Serious lessons will be learned. “