In an announcement on Tuesday, Credit Suisse Group AG (ETR: CSX) said it will take a hit worth £3.41 billion attributed to dealings with the New York investment fund, Archegos Capital Management.
Credit Suisse opened at £8.04 per share on Tuesday and closed the regular session at £7.84 per share after touching an intraday low of £7.72 per share. In comparison, the stock had started the year at £8.83 per share. If you want to invest in the stock market online, you’ll need a reliable stockbroker – here’s a list of the top few to make selection easier for you.
Credit Suisse expects a loss of £697 million in Q1
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Credit Suisse now forecasts roughly £696.85 million loss for the first quarter. The financial services company also slashed its dividend by about 66% and suspended its stock repurchase plans. In comparison, the global wealth manager had posted £2.09 billion of annual net profit last year.
The scandal-hit bank resorted to scrapping stock worth more than £1.44 billion to end exposure to Bill Hwang-run Archegos Capital Management. Credit Suisse also said on Tuesday that Brian Chin (investment banking head) and Lara Warner (Chief Risk and Compliance Officer) will be stepping down.
Chief Executive Thomas Gottstein commented on the news on Tuesday and said:
“The significant loss in our Prime Services business relating to the failure of a U.S.-based hedge fund is unacceptable. Serious lessons will be learned.”
In separate news from Europe, France raised its stake by over 100% in Air France-KLM on Tuesday – a move that brought the airline holding company under the government’s wing.
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Credit Suisse dumps executive board members’ bonuses
Credit Suisse also dumped executive board members’ bonuses on Tuesday and said that Urs Rohner (outgoing chairman) will forgo his chair fee for the year worth £1.16 million. The Zurich-headquartered firm has already named Antonio Horta-Osario as its new chairman. Antonio has previously worked as a Chief Executive at UK’s Lloyds Bank.
Credit Suisse has now faced two major scandals since last month, with the former resulting from the collapse of Greensill Capital in early March 2021. The board has already launched a probe into both scandals.
Credit Suisse performed largely downbeat in the stock market last year with an annual decline of a little under 15%. At the time of writing, the investment bank is valued at £19.18 billion and has a price to earnings ratio of 9.58.