The Swiss bank Credit Suisse has failed in risk management in the failed investment case in Archagos; This is how she found an independent investigation ordered by the bank’s board of directors. The bank’s share is down about 3% now.
The affair included providing large credits to South Korean investor Bill Huang’s family fund for leveraged trading in U.S. and Chinese technology stocks, and a loss of more than $ 4 billion when the fund went bankrupt following a decline in the value of the companies in which it invested. Huang was previously convicted of trading on the basis of inside information, and was banned from trading on the Hong Kong Stock Exchange.
In fact, all the major international investment banks, including Goldman Sachs, Morgan Stanley and UBS, have “opened the back door” to Huang, allowing him in recent years to trade on a huge scale through SWAP contracts, which have hidden the real buyers of stocks and bonds from the market. Huang claimed to be a trader on a Christian ethical basis, and promoted evangelistic goals. When a collapse in about one of the shares threatened to collapse the leveraged investments, some of the banks quickly sold the shares they held as collateral and caused a sharp decline in their value. Credit Suisse is among the only ones who did not hold sufficient guarantees, hesitated in realization and as a result suffered billions in losses.
“Did not understand that the financial situation of Archagos”
Archagos took on liabilities worth € 10 billion before going bankrupt. It has invested in leading technology stocks such as Apple, Amazon in the US and Ido in China, along with holding shares in Tencent Music, Discovery and Viacom. Brian Chin.
The commission of inquiry that submitted its concluding report today found that the bank had failed “in the first and second lines of defense” and provided too much credit to the family fund, and that it failed to understand that Archagos’ financial situation had worsened and demanded more guarantees. “It seems possible that Archagos deceived Credit Suisse and hid the true scope of its holdings.” , Written.
Credit Suisse announced earlier this year the cancellation of bonuses for executives this year and also cut the dividend to shareholders by two.thirds. The bank reported dismal results for the second quarter today, with a 78% decrease in profit compared to the second quarter last year. The bank reported earnings in the current quarter worth $ 278 million. The bank is also facing another bankruptcy case, by Grinsil Capital, in which it helped market financial products to its customers for billions of dollars.