Credit Suisse Posts $275 Million Loss After Taking Hit Over Hedge Fund
While Credit Suisse Group AG posted a 31 percent year-over-year rise in net revenues for Q1 2021, the Swiss bank generated a loss for the period after absorbing a number of items that had a “considerable impact” on its reported results, according to management.
“Our results for the first quarter of 2021 have been
significantly impacted by a CHF 4.4 bn [approximately $4.8 billion] charge
related to a US-based hedge fund. The loss we report this quarter, because of
this matter, is unacceptable. Together with the Board of Directors, we have
taken significant steps to address this situation as well as the supply chain
finance funds matter,” Credit Suisse Group AG CEO Thomas Gottstein said in an
earnings press release.
However, Gottstein said that underlying financial
performance for the quarter throughout each division was “strong, supported by
solid results in Switzerland, and strong growth in APAC and investment
banking.”
All in, Credit Suisse reported net revenues of 7.6 billion
CHF (approximately $8.3 billion) on a net loss of CHF 252 million
(approximately $275 million).
The news comes as Credit Suisse had to halt four
Luxembourg-based funds that invested $10 billion in supply chain finance,
adding to the fallout from the collapse of United Kingdom upstart Greensill
Capital.
The second-biggest bank in Switzerland was a main funding
source for the upstart, which was co-founded by Lex Greensill and Jason Austin.
In an investors’ note, Credit Suisse revealed a temporary
suspension for the four funds, noting that the board came to the decision that
it would be too challenging to set an accurate price for the supply
chain-linked shares held by the four funds.
The four impacted funds are the Credit Suisse (Lux)
Institutional Target Volatility Fund, Credit Suisse (Lux) Qatar Enhanced Short
Duration Fund, Credit Suisse (Lux) Multi-Strategy Alternative Fund and the
Credit Suisse (Lux) Multi-Strategy Bond Fund.
The U.S. Federal Reserve previously ordered the bank to
strengthen its anti-money laundering (AML) procedures, pointing to shortcomings
in its U.S. business.
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