Credit Suisse shares rally while Archegos ripples spread
01/04/2021 15:41
By Takashi Umekawa and Oliver Hirt
TOKYO/ZURICH, April 1 (Reuters) - Credit Suisse CSGN.S
shares edged higher on Thursday, ending a losing streak in which
they shed close to a fifth of their value, though the lender is
yet disclose how much it lost in trades for stricken U.S. fund
Archegos.
Defaults on margin calls by Archegos Capital, a family
office run by former Tiger Asia manager Bill Hwang, caused a
clutch of banks to rapidly unwind billions of dollars of his
leveraged trades. urn:newsml:reuters.com:*:nL1N2LS2LQ
Credit Suisse and Japan's Nomura have borne the brunt of
those losses, with the Swiss lender warning it could have a
"material impact" on its profits, but details of who else was
exposed to Hwang are still emerging.
Japanese financial firm Mizuho Financial Group Inc 8411.T
may face a loss of 10 billion yen ($90 million) from deals with
Archegos, the Nikkei newspaper reported on Thursday.
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"We refrain from making comments on individual deals, but we
don't currently see any issue that may affect our profit
forecast," a spokeswoman for Mizuho said, adding the bank does
not conduct prime brokerage services globally.
Mizuho's U.S. subsidiary has lent to Archegos, the Nikkei
reported.
Mizuho rival Nomura has said it expects to book a $2 billion
loss on Archegos.
Credit Suisse is expected to detail in the coming days the
scale of the losses it is facing as a result of its dealings
with Archegos, according to a source familiar with the matter.
Two sources close to the bank said they could be as high as $5
billion, a figure the bank has declined to comment on.
Switzerland's second largest lender has lost almost a
quarter of its value over the past month, hit first by worries
over its exposure to collapsed UK supply chain firm Greensill
and then Archegos. Supply chain funds run by the bank had
invested $10 billion in securities issued by Greensill, and it
is not clear how much of that they will get back.
The bank said in a notice to investors on Wednesday that it
expects to get the "majority" of that money to be recovered.
urn:newsml:reuters.com:*:nL1N2LU0OY
Its shares were up 2.66% on Thursday though still down 18%
for the week, while Nomura closed up 0.22% but is down 19% since
Monday.
Credit Suisse's CoCo, or contingent convertible dollar bond
maturing Dec 2023 has fallen more than three cents in price
since last Friday and is now trading at 107.7 points, the lowest
since July, MarketAxess data shows.
Average daily trading volumes in the bond spiked in March
over $1.9 billion compared to February levels of $710 million
CH098939458= .
(Reporting by Takashi Umekawa in Tokyo, John O'Donnell, and
Oliver Hirt in Zurich and Sujata Rao in London
Writing by Rachel Armstrong; Editing by Kirsten Donovan)
((rachel.armstrong@thomsonreuters.com; +44 207 5423365; Reuters
Messaging: rachel.armstrong.thomsonreuters.com@reuters.net))