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The Archegos fiasco shakes up finance

2021-04-29T21:33:58.498Z

The company has cost UBS, Nomura, Credit Suisse and other competitors large sums of money. "They weren't all going to die, but they were all hit." Like the Plague Sick Animals , the fable of Jean de La Fontaine, a very large number of international investment banks were affected by the debacle of the American investment company Archegos Capital Management. This family office dedicated to managing the wealth of businessman Bill Hwang took extremely risky positions in equities through fin



"They weren't all going to die, but they were all hit."

Like the

Plague Sick Animals

, the fable of Jean de La Fontaine, a very large number of international investment banks were affected by the debacle of the American investment company Archegos Capital Management.

This

family office

dedicated to managing the wealth of businessman Bill Hwang took extremely risky positions in equities through financial intermediaries.

Read also:

Financial scandals have been increasing for months

The list of banks that suffered from the fiasco continues to grow.

Very discreet so far on the subject, UBS, the first Swiss bank, revealed on Tuesday that the implosion of the Archegos fund cost it $ 774 million.

The Japanese financial group Nomura has just revised upwards the amount of its losses which now reach $ 2.3 billion.

Japanese banks Mitsubishi UFJ Financial Group (MUFJ) and Mizuho are also affected, but to a much lesser extent.

Credit Suisse pays a heavy bill

For the American bank Morgan Stanley, the slate amounts to 911 million dollars.

But Credit Suisse is paying the heaviest price: Archegos has already cost it 4.4 billion Swiss francs (3.9 billion euros) and it expects 600 million additional losses.

Other institutions like Goldman Sachs, however, have managed to manage the risks associated with the fund and avoid setbacks.

In total, the collapse of the American fund has already caused losses of 10 billion dollars to the big banks.

Read also:

Credit Suisse and Nomura in turmoil because of the setbacks of an American hedge fund

Has global finance returned to the excesses that led to the 2008 financial crisis?

“Market activities have been very profitable for many months, which leads investment banks to take more risks,”

explains Jérôme Legras, head of research at Axiom AI.

But, the financial products used by Archegos were very complex and the banks may not always be well equipped to manage the risks.

Source: lefigaro

All business articles on 2021-04-29

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