NEWS UPDATE
SELL-SIDE
Credit Suisse to exit prime brokerage following Archegos Capital losses
The bank will ditch the majority of its prime services business after the collapse of Archegos cost it $ 5.5 billion and led to an in-house risk review .
Credit Suisse says it will all but exit prime brokerage services , following the fallout from the collapse of Archegos Capital Management which cost the Swiss-bank $ 5.5 billion and forced a wholesale review of risk management across its business . On November 4 , the day of its third quarter earnings reveal , the bank said it will now place risk management at the core of its bank and focus on a “ culture that reinforces the importance of accountability and responsibility ”.
Two smaller parts of the prime services – Index Access and APAC Delta One – will remain active . In addition , Credit Suisse will reduce its long duration structured derivatives book , while exiting approximately 10 non-core Global Trading Solutions markets , which it believes will lead to an expected capital reduction of 25 % from 2020 levels by next year . Starting from January next year , the Group will be reorganised into four divisions with a “ simplified model ” – wealth management , investment bank , Swiss bank , and asset management . The new leadership structure will be announced in the near future , the bank confirmed . Credit Suisse has operated as one of the world ’ s largest prime brokers , but racked up the biggest losses of all the banks entangled in Archegos Capital Management . There were over $ 10 billion in losses across the Street , with Credit Suisse accounting for more than half .
10 // TheTRADE // Winter 2021