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Credit Suisse, Nomura face losses as banks tally Archegos damage

Nomura Holdings and Credit Suisse Group said they face potentially "significant" losses as some of the world's biggest banks tally their exposure to the massive unwinding of leveraged equity bets by Archegos Capital Management.

Photo: CARLO ALLEGRI/REUTERS / X90181

Lenders to Bill Hwang's New York-based family office have been racing to contain the fallout after Archegos failed to meet margin calls last week.

The forced liquidation of more than USD 20bn of positions linked to Archegos has roiled stocks from Baidu Inc. to ViacomCBS Inc. and cast a spotlight on the opaque world of leveraged trading facilitated by some of the biggest names on Wall Street.

Nomura, whose shares tumbled by the most on record Monday, said in a statement that the estimated amount of its claim against an unnamed U.S. client was about USD 2bn. That client is Archegos, according to people familiar with the matter.

Credit Suisse said it was in the process of exiting positions after a U.S.-based hedge fund defaulted on margin calls.

"While at this time it is premature to quantify the exact size of the loss resulting from this exit, it could be highly significant and material to our first quarter results," the bank said in an emailed statement, without naming the fund.

Credit Suisse shares were indicated about 7 percent lower before the official open of trading in Europe. The potential loss is the latest blow to the Swiss bank, already reeling from the Greensill scandal and the write-down on a hedge fund stake and other hits in 2020.

Goldman Sachs is telling shareholders and clients that any losses it faces from Archegos are likely to be immaterial, a person familiar with the matter said.

The New York-based bank's loans to Archegos were fully collateralized and Goldman was among the first to begin reducing its exposure, the person said, asking not to be identified because the information is private.

The bank has exited most of its Archegos-related positions, the person added. A media representative at Goldman declined to comment.

Morgan Stanley is also a prime broker to Archegos and was among the banks managing the sale of Archegos positions via block trades on Friday, according to people familiar with the matter. It's unclear whether the bank faces losses. Morgan Stanley declined to comment.

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