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April 6, 2021, 12:41 p.m. EDT

Credit Suisse losses linked to Archegos fire sale hit $4.7 billion, with executives to leave bank

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By Jack Denton

Losses at Credit Suisse linked to the meltdown of Archegos Capital Management will top 4.4 billion Swiss francs ($4.7 billion), the bank said on Tuesday, as it slashed its dividend and detailed executive departures following two crises in the last month.

Shares in Credit Suisse /zigman2/quotes/205269278/delayed CH:CSGN -0.57% fell 2% in early European trading before paring losses and settling 0.4% lower. The stock is now down near 20% since March 29, when the bank said that the default of a U.S. hedge on margin calls could lead to a “highly significant and material” impact on quarterly results.

Credit Suisse said that it now expects to report a 900 million franc loss for the first quarter of 2021, driven by a 4.4 billion franc charge related to losses from the fire sale at banks linked to Archegos in late March. “This will negate the very strong performance that had otherwise been achieved by our investment banking businesses,” the Swiss group said in a trading update.

Read more: Here are the complex bets at the heart of ‘unprecedented’ Archegos-linked $30 billion margin call

The bank also announced plans to slash its dividend to 0.1 francs per share and said that both its investment banking head, Brian Chin, and chief risk and compliance officer, Lara Warner, would step down from their roles. The dividend cut and executive departures come after two crises for Credit Suisse in March.

Earlier in the month, before the meltdown at Archegos, Credit Suisse froze $10 billion in funds connected to Greensill Capital, a now-insolvent supply-chain finance company.

Read this: Credit Suisse may incur Greensill related charge

Credit Suisse’s update came on an otherwise buoyant day of trading in Europe. The pan-European Stoxx 600 /zigman2/quotes/210599654/delayed XX:SXXP -0.54% rose 0.7% while both London’s FTSE 100 /zigman2/quotes/210598409/delayed UK:UKX -0.42% climbed 1.28% and Frankfurt’s DAX /zigman2/quotes/210597999/delayed DX:DAX -0.64% lifted 0.7%. The CAC 40 /zigman2/quotes/210597958/delayed FR:PX1 -0.71% in Paris rose 0.47%.

U.S. stocks were mixed, with the Dow around 50 points lower after climbing more than 370 points on Monday to close at a new high of 33,527. 

Analysts noted that the continued spread of coronavirus infections in Europe remains a wider concern for markets in the week ahead.

“It’s likely that the COVID pandemic will continue to dominate given the jitters in multiple countries over the rising case counts,” said Henry Allen, an analyst at Deutsche Bank.

“Europe has already been shifting towards tougher restrictions, with the French lockdown beginning on Saturday,” Allen added. “The main exception to this pattern has been the U.K. however, which has one of the most advanced vaccination programs in the world.”

Stocks in Asia moved lower, with the Shanghai Composite /zigman2/quotes/210598127/delayed CN:SHCOMP -0.59% dropping 0.04%. “One factor which seems to be weighing on markets in the region,” said Allen, is reports that the Chinese central bank has asked lenders to curtail credit for the remainder of the year, according to Bloomberg .

BP /zigman2/quotes/202286639/delayed UK:BP -0.29% was a standout in London trading, with shares in the oil major rising 3.8% after the group said it expects to hit its $35 billion net debt target in the first quarter of 2021, earlier than expected and paving the way for share buybacks. The group’s net debt at the end of 2020 was $38.9 billion.

SAP /zigman2/quotes/202053813/delayed XE:SAP +1.04% stock lifted 2.5% in Frankfurt, after CNBC reported that technology giant Google /zigman2/quotes/202490156/composite GOOGL -1.59% will stop using Oracle’s financial software in the next few weeks and switch to SAP.

Shares in French biotech Valneva /zigman2/quotes/202377434/delayed FR:VLA -4.28% climbed near 6% before paring gains to settle just below flat, after the group reported positive early results for its COVID-19 vaccine.

/zigman2/quotes/205269278/delayed
CH : Switzerland: SWX
CHF 9.37
-0.05 -0.57%
Volume: 6.90M
July 27, 2021 5:31p
P/E Ratio
21.77
Dividend Yield
1.07%
Market Cap
CHF24.19 billion
Rev. per Employee
CHF621,202
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/zigman2/quotes/210599654/delayed
XX : STOXX
458.65
-2.49 -0.54%
Volume: 0.00
July 27, 2021 11:03p
loading...
/zigman2/quotes/210598409/delayed
UK : FTSE UK
6,996.08
-29.35 -0.42%
Volume: 497,148
July 27, 2021 4:49p
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/zigman2/quotes/210597999/delayed
DAX
DX : Xetra Indices
15,519.13
-99.85 -0.64%
Volume: 44,081
July 27, 2021 6:30p
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/zigman2/quotes/210597958/delayed
FR : France: Euronext Paris
6,531.92
-46.68 -0.71%
Volume: 60,870
July 27, 2021 6:05p
loading...
/zigman2/quotes/210598127/delayed
CN : China: Shanghai
3,361.08
-20.10 -0.59%
Volume: 27.03B
July 28, 2021 12:18p
loading...
/zigman2/quotes/202286639/delayed
UK : U.K.: London
291.40 p
-0.85 -0.29%
Volume: 27.97M
July 27, 2021 4:35p
P/E Ratio
N/A
Dividend Yield
5.23%
Market Cap
£58.91 billion
Rev. per Employee
£2.21M
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/zigman2/quotes/202053813/delayed
XE : Germany: Xetra
118.82
+1.22 +1.04%
Volume: 2.05M
July 27, 2021 6:30p
P/E Ratio
23.93
Dividend Yield
1.56%
Market Cap
€138.72 billion
Rev. per Employee
€266,894
loading...
/zigman2/quotes/202490156/composite
US : U.S.: Nasdaq
$ 2,638.00
-42.70 -1.59%
Volume: 2.74M
July 27, 2021 4:00p
P/E Ratio
35.12
Dividend Yield
N/A
Market Cap
$1832.81 billion
Rev. per Employee
$1.35M
loading...
/zigman2/quotes/202377434/delayed
FR : France: Euronext Paris
11.62
-0.52 -4.28%
Volume: 491,540
July 27, 2021 5:39p
P/E Ratio
N/A
Dividend Yield
N/A
Market Cap
€1.21 billion
Rev. per Employee
N/A
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