Credit Suisse Announces Big Departures After Hit from Archegos Hedge Fund Scandal

According to a CNBC report, Swiss lender Credit Suisse has announced several departures of high level staff including Investment Bank CEO Brian Chin and Chief Risk and Compliance Officer Lara Warner. The two will step down from their roles immediately.

The report also states that Credit Suisse has cut its dividend on the hit from the Archegos hedge fund scandal.

Not long ago Credit Suisse had said that it was expecting heavy losses in the wake of the meltdown of U.S. hedge fund Archegos Capital. The company took a charge of $4.7 billion as a result and now expects a first-quarter pre-tax loss of around $960.4 million.

“Particularly following the significant US-based hedge fund matter, the Board of Directors is amending its proposal on the distribution of dividends and withdrawing its proposals on variable compensation of the Executive Board,” the company announced.

The bank had to unload a significant amount of stock to sever its ties to the troubled family office, and now expects a first-quarter pre-tax loss of around 900 million Swiss francs ($960.4 million).

“This includes a charge of CHF 4.4 billion in respect of the failure by a US-based hedge fund to meet its margin commitments as we announced on March 29, 2021,” Credit Suisse said.

The lender’s executive board has also waived its bonuses for the 2020 financial year and Chairman Urs Rohner was giving up his “chair fee” of 1.5 million Swiss francs.

The lender will now propose a dividend of 0.10 Swiss francs gross per share along with the amended compensation report at its AGM on April 30th.

Credit Suisse has two separate investigations by third parties into the Greensill and Archegos scandals. The company says it will “not only focus on the direct issues arising from each of them, but also reflect on the broader consequences and lessons learned.”

Christian Meissner, currently Credit Suisse’s co-head of international wealth management investment banking advisory and vice chairman of investment banking will replace Chin on May 1st.

Joachim Oechslin has been appointed interim chief risk officer and Thomas Grotzer interim global head of compliance as of Tuesday. All three will report to CEO Thomas Gottstein.

“The significant loss in our Prime Services business relating to the failure of a U.S.-based hedge fund is unacceptable,” Gottstein said.

“In combination with the recent issues around the supply chain finance funds, I recognize that these cases have caused significant concern amongst all our stakeholders. Together with the Board of Directors, we are fully committed to addressing these situations. Serious lessons will be learned.”

Disclaimer: We have no position in any of the companies mentioned and have not been compensated for this article.