Credit Suisse to cut dividend, overhaul senior management and book US$4.7 billion in first-quarter loss from Archegos fallout
- Loss related to Archegos’ margin calls will hit Credit Suisse with a US$4.7 billion first-quarter charge, pushing the bank into a pre-tax loss of approximately US$960 million
- The Swiss bank will cut its 2020 dividend and overhaul its senior management
Credit Suisse said it expects to post a pre-tax loss in its firs-quarter results due on April 22, inclusive of a charge from Archegos Capital Management’s trading losses, becoming one of the largest casualties in the world’s biggest margin call.
The Zurich-based bank will book a charge of 4.4 billion Swiss francs (US$4.7 billion) in the first three months due to losses at a US hedge fund, Credit Suisse said without naming the fund. The charge will push Credit Suisse into a pre-tax loss of around 900 million francs (US$960 million) in the quarter, cancelling out the profit growth in its asset management unit helped particularly by its Asia Pacific division, the bank said in a trading update on Tuesday, adding that figures are still subject to finalisation and review.
The Swiss bank first revealed on March 29 that it was expecting “highly significant” loss in its first quarter as a result of trading losses tied to the highly-leveraged portfolio of Archegos.
The bank employs about 48,770 people globally. Due to the Archegos-related losses, the board of Credit Suisse has proposed cutting total dividend payout for the 2020 financial year to 0.1 franc per share, from the 0.2926 franc per share originally proposed. The dividend cut is part of the agenda of the annual shareholders’ general meeting scheduled on April 30.
Brian Chin, chief executive of the investment bank, and Lara Warner, chief risk and compliance officer will step down from their roles, effective April 30 and April 6 respectively. Thomas Grotzer, who previously served as General counsel and an executive board member at Credit Suisse (Schweiz), will step down from these roles and become interim global head of compliance with immediate effect, the bank said. Joachim Oechslin is appointed as interim Chief Risk Officer.
Chin’s role will be taken over by Christian Meissner, who has served as Credit Suisse’s co-head of international wealth management investment banking advisory and vice-chairman of investment banking since October 2020. All three newly-appointed executives will report to the chief executive Gottstein.
Separately, chairman Urs Rohner has also proposed to waive his 1.5 million francs in chairman fees. This item has already been approved by the board.