Niuniu hit the blackboard: the aftermath of the explosion of hedge fund Archegos has brought at least $7.6 billion in losses to major investment banks, including Credit Suisse, Nomura and Morgan Stanley, according to media statistics.
The aftermath of the explosion of hedge fund Archegos has caused at least $7.6 billion in losses for major investment banks, according to current statistics.
Among them, three companies have been hit by the explosion of Archegos positions of different sizes:
Credit Suisse: loss of at least $4.7 billion
Nomura: loss of about $2 billion
Morgan Stanley: loss of 911 million US dollars
Morgan Stanley, the latest investment bank to disclose the amount of losses, said when it released its performance data before trading on April 16:
Credit losses related to a "single prime broker client" of $644 million and trading losses of $267 million were recorded in the quarter.
After that, James Gorman, Morgan Stanley's chief executive, confirmed that the above-mentioned "single prime broker client" was Archegos.
One of the reasons for Morgan Stanley's loss of less than $1 billion may be related to a "rush" in the sell-off. According to an earlier article on Wall Street, Morgan Stanley sold $8 billion of shares on March 26, while the total value of the sell-off reached $15 billion in a few days, avoiding major losses.
As for the reason why Goldman Sachs Group avoids large losses, it is also related to the rush. Before the opening of US stocks on March 26th, Goldman Sachs Group sold $6.6 billion of Baidu, Inc., Tencent Music and Vipshop Holdings Limited shares through block trading, and sold another $3.9 billion of ViacomCBS, Discovery, Farfetch Ltd., iQIYI, Inc. and shares from whom he learned that afternoon.
The situation at Deutsche Bank is different. According to reports, Deutsche Bank transferred the main business to BNP Paribas as early as 2019, or survived as a result. A spokesman for Deutsche Bank said in an interview via email:
We are gradually reducing the remaining small number of customer positions, which are not expected to cause any losses.
But Credit Suisse's losses are much bigger than those of the fast-running investment banks. According to previous reports, Credit Suisse expects to write down 4.4 billion Swiss francs ($4.7 billion) in bad debts in the first quarter as a result of the burst, which also endangers its share buyback program of at least $1.06 billion. Before the explosion, Credit Suisse management had been under increased pressure because of the collapse of Greensill, a supply chain finance company.
Nomura also suffered huge losses in this incident. Nomura has previously said in a statement that it is assessing the extent of the losses caused by the burst and its possible impact on performance, involving about $2 billion. Bank executives said it was difficult to say when the loss would be determined and whether the loss would be included in January-March. The executive also declined to comment when asked how many Archegos-related positions Nomura had removed, saying he could not discuss the case.
Edit / elisa