Home Stock Credit Suisse drained shareholders' cash when the regulator investigated Archegos's loss

Credit Suisse drained shareholders’ cash when the regulator investigated Archegos’s loss


Credit Suisse Swiss Bank said on Thursday it will sell convertible bonds to its existing shareholders in an effort to raise nearly $ 2 billion in new capital, to fix the balance sheet after losses caused by the collapse of hedge fund Archegos Capital Management of the US and the supply chain finance group Greensill of the UK.

  • The Swiss financial regulator Finma also said on Thursday that it had “opened enforcement proceedings” against the bank and would Notably the investigation “Possible flaws in managing risk” in two financial scandals.

  • The bank said it sold 203 million of the required convertible bonds to “a selected core group of shareholders” and institutional investors to consolidate its capital base. Securities will convert to shares in six months.

  • Credit Suisse posted a drop of CHF 4.4 billion in the first quarter of the year, resulting in a loss of CHF 757 million even as all other global investment banks reported record profits for the same period.

  • “The loss we are reporting this quarter (…) is unacceptable,” CEO Thomas Gottstein said on Thursday.

  • Credit Switzerland
    CS,
    -3.23%

    Shares fell 6% on Thursday. Prices are now down 34% since the start of March, shortly before the bank’s Greensill exposure was revealed.

Read: The Credit Suisse CEO baked on the unprofitable Archegos. Here’s what they said.

Prospects: Credit Suisse has cut bonuses, fired executives and reduced risky operations after two failures. It’s a transition period of leadership: Gottstein has only been in the job for a year, and António Horta-Osorio, now Lloyds Banking Group
LYG,
-1.95%

executive director, will be elected president of the Swiss bank next week.

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