Credit Suisse sells US$2.3bil of stocks tied to Archegos

ZURICH: Credit Suisse Group AG unloaded about US$2.3bil (RM9.43bil) worth of stocks tied to the Archegos Capital blowup more than a week after some rivals dumped their shares and skirted losses.

The Swiss bank hit the market with block trades tied to ViacomCBS Inc, Vipshop Holdings Ltd and Farfetch Ltd, a person with knowledge of the matter said. The stocks traded substantially below where they were last month before Bill Hwang’s family office imploded.

Shares in the three companies declined in postmarket trading, as did US-listed shares of Credit Suisse.

The Zurich-based firm has yet to provide investors with an update on the extent of the hit it faces from its relationship with Archegos, but it could run into the billions of dollars, according to people with knowledge of the matter. Credit Suisse’s investment-bank chief Brian Chin is set to leave, Leaders are also discussing removing chief risk officer Lara Warner, while sparing chief executive officer Thomas Gottstein.

Paul Galietto, head of equities sales and trading, meanwhile, is stepping down from that role effective immediately, though he will stay through April to assist in the transition, the bank said in a staff memo reviewed by Bloomberg.

The unwinding of Bill Hwang’s Archegos portfolio has turned into one of the biggest fund flameouts since Long-Term Capital Management’s demise in the 1990s.

Archegos had grown rapidly on the back of heavily leveraged bets. These came undone within days late last month as stocks including ViacomCBS and GSX Techedu Inc tumbled, triggering margin calls.

Credit Suisse and Nomura Holdings Inc have told shareholders their businesses face “significant” losses. Goldman Sachs Group Inc and Morgan Stanley, which were among the first banks to liquidate Archegos’s holdings, appear to have avoided hits to their businesses.

Given Archegos’s size, banks may accrue total losses in the range of US$5bil to US$10bil as positions get unwound, JPMorgan Chase & Co analysts led by Kian Abouhossein wrote in a note to clients last week.

The Credit Suisse offering on Monday comprised about 34 million shares in ViacomCBS, 14 million shares of Vipshop and 11 million shares of Farfetch. — Bloomberg

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