Credit Suisse has lost ground to rival banks to win a new venture for its prime brokerage unit this year after suffering a $ 5.5 billion credit loss extended to the family office. Archegos of Bill Hwang and is committed to reducing risk in its business.
By 2021, Credit Suisse had sold about 2.5 percent of its new hedge fund clients served by primary brokers, delaying an average of 5.5 percent for the previous six years, data compiled by Preqin for the Financial Times have shown.
Credit Suisse has signed four of 156 new hedge funds served by major banks so far this year. This has seen Credit Suisse infiltrate the top media brokerage tables of new hedge funds served from the sixth in 2020 to the new in 2021, according to data from Preqin, which tracks the alternative asset management industry.
The figures underscore the impact on Credit Suisse of Archegos ’March operation, which managed the wealth of the family of former hedge fund manager Bill Hwang. Credit Suisse declined to comment.
In April, Thomas Gottstein, executive director of Credit Suisse, told investors that brokerage and early financing companies would be “downsized and de-risked” following the losses of Archegos.
“By the end of 2021, we plan to reduce the investment bank’s leverage exposure by at least $ 35 billion, and to align risk-weighted assets to no more than end-of-year levels. 2020, ”Gottstein said.
Primary intermediation divisions respond to hedge funds and wealthy clients who offer a range of services including stock loans, leverage and commercial execution.
Made to scale, it is considered one of the most lucrative sectors of banking investment. Kian Abouhossein, an analyst at JPMorgan, estimated that Credit Suisse won $ 900m in revenue last year from the unit.
Many Wall Street banks, including Goldman Sachs, Morgan Stanley and Nomura, have provided prime brokerage services to Archegos, but Credit Suisse has suffered far greater and heavier losses.
The bank said the sale of the shares associated with Archegos cost more than $ 5 billion. In comparison, Nomura lost nearly $ 3 billion, Morgan Stanley suffered a $ 911 million success, while Goldman Sachs escaped largely unscathed.
Then, Credit Suisse has launched the management of its first intermediation unit, with John Dabbs and Ryan Nelson resigning, the Financial Times reported in April. Brian Chin, head of investment banking at Credit Suisse, and Lara Warner, head of risks and compliance, also left the bank.