Credit Suisse and Nomura face heavy losses from the implosion of Archegos.Credit:Bloomberg
Analysts and investors are trying to figure out the final losses to banks exposed to the Archegos implosion,with the task made harder by the opaque nature of the leveraged trading involved. JPMorgan had previously estimated losses in the range of $US2 billion to $US5 billion.
“We are still puzzled why Credit Suisse and Nomura have been unable to unwind all their positions at this point,” the analysts wrote,adding that they expect to see full disclosures from lenders by the end of this week.
The analysts advised investors to keep an eye on credit agencies’ statements as they expect poor risk management to be an issue.
That’s an emerging theme at Credit Suisse,where executives are expecting the loss related to Archego to run into the billions,according to people with knowledge of the matter. March’s blowups may wipe out more than a year of profits for the bank and threaten its stock buyback plans,as well as adding to the reputational hit from other missteps.
“We are still puzzled why Credit Suisse and Nomura have been unable to unwind all their positions at this point.”
JPMorgan analysts
Buyback risk
The bank’s plans to buy back 1.5 billion Swiss francs ($2.1 billion) of shares are at risk,according to Berenberg analyst Eoin Mullany. He estimates the lender could face losses of $US3 billion to $US4 billion.