Wednesday, April 21, 2021
 
Columnist
Martin Hennecke

Heads roll as Credit Suisse takes $36b Archegos hit
 
07/04/2021
 
Credit Suisse Group said it will take a hit of more than HK$36 billion tied to the implosion of Archegos Capital Management and replace two top executives after a series of losses and scandals raised questions about its risk management. The 4.4 billion Swiss franc (HK$36.46 billion) charge will result in a pretax loss of about 900 million Swiss francs for the first quarter, the bank said in a statement yesterday. Credit Suisse scrapped bonuses for top executives, cut its dividend and suspended share buybacks to protect its capital. Investment bank head Brian Chin and chief risk officer Lara Warner are leaving. Chief executive officer Thomas Gottstein vowed he will draw "serious lessons" after the Archegos loss and the collapse of Greensill Capital last month derailed his effort to move past a turbulent 2020. The firm is the worst-performing major bank stock in the world so far this year as a strong first two months for its investment bank business are being overshadowed by its exposure to the failed firms. Chin and Warner are the highest-ranking executives to leave over the twin hits. Gottstein earlier removed Eric Varvel from his role running asset management after Greensill's downfall. In a memo to staff Monday, Credit Suisse also announced at least five other departures, including equities trading chief Paul Galietto. Christian Meissner, the former Bank of America executive who joined Credit Suisse in October, will take over from Chin next month. Joachim Oechslin will become risk chief in the interim, a role he held until 2019 when Warner took over. Thomas Grotzer was named interim head of compliance. The bank cut its dividend proposal for 2020 to 10 centimes a share, from about 29 centimes, and suspended its share buyback until its common equity Tier 1 ratio, a key measure of capital strength, returns to the targeted level. Chairman Urs Rohner offered to forgo his compensation for 2020 of 1.5 million Swiss francs and bonuses for the executive board have been scrapped for that year.

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