Credit Suisse posts 252 million Sfr Q1 loss as Archegos wipes trading gains

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By Brenna Hughes Neghaiwi

ZURICH (Reuters) -Credit Suisse on Thursday posted a slightly smaller-than-flagged 757 million Swiss franc first-quarter pre-tax loss, as a multi-billion dollar hit from the collapse of U.S. investment fund Archegos stymied a bumper trading quarter.

Stripping out the 4.4 billion franc charge and other significant items, the bank said pre-tax profit would have been 3.6 billion francs, which would have represented the bank’s best quarter operationally in at least a decade.

A net loss of 252 million francs compared with a mean estimate of 815 million francs in the bank’s own poll of 17 analysts.

It said it was raising capital by issuing notes convertible into 203 million shares.

“The loss we report this quarter, because of (the U.S.-based hedge fund) matter, is unacceptable,” Chief Executive Thomas Gottstein said in a statement. “We expect that our successful MCN placement today will further strengthen our balance sheet and enable us to support the momentum in our core franchise.”

Credit Suisse has emerged as the bank hardest-hit from exposure to Archegos, which collapsed when it could not meet margin calls.

Credit Suisse said it expects a residual impact of approximately 600 million Swiss francs from the U.S.-based hedge fund matter in 2021. It already had exited 97% of the related positions.

That, plus the demise of another client, Greensill Capital, has triggered internal and external probes and the ousting of a swathe of executives.

U.S. rivals, some of which were quicker to exit trading positions as Archegos collapsed, produced forecast-beating profit for the first quarter. Net income at Goldman Sachs Group Inc rose nearly six-fold. Morgan Stanley disclosed an almost $1 billion loss from Archegos yet still reported a 150% jump in profit.

Highlighting the strong environment, Credit Suisse posted bumper earnings in its Asia-Pacific unit up 154% year-on-year and a 25% pre-tax profit rise in its Swiss business – the only two divisions unscathed by the recent episodes with Archegos and Greensill.

(Reporting by Brenna Hughes Neghaiwi; Editing by Michael Shields)