- Credit Suisse chief risk officer Lara Warner is at risk of being replaced, Bloomberg reported.
- The role of Brian Chin, CEO of his investment bank, is also said to be under scrutiny.
- Credit Suisse was involved in the Archegos and Greensill crashes.
Executives at Switzerland-based Credit Suisse are discussing the replacement of Lara Warner, chief risk officer, after the bank was involved in several high-profile incidents, resulting in significant potential losses, Bloomberg reported. The outlet cited people with knowledge of the matter.
Despite CEO Thomas Gottstein’s commitment to a clean slate in 2021, after a previous spy scandal at the bank, Credit Suisse was one of the worst performing major bank stocks in 2021.
The recent collapse of Greensill, along with the chaos in Archegos, has potentially left investors with another quarter of losses.
The role of Brian Chin, CEO of Credit Suisse investment bank, is also under scrutiny, two of the sources told Bloomberg. They added that the bank is planning a review of its blue chip brokerage business, which is the responsibility of its investment bank.
Credit Suisse declined to comment.
The bank was one of Softbank’s major lenders Green threshold, a supply chain lender who was recently forced to file for bankruptcy. A $ 140 million secured loan to Greensill is now in default, although $ 50 million was recently repaid by the directors, Bloomberg reported.
These are essentially bundled debts that are put on the market through a single security. Investors receive scheduled payments on loans, but bear most of the risk if borrowers default.
The Swiss bank’s asset management unit also managed a $ 10 billion group of funds with Greensill, which are in the process of being liquidated.
On Monday, the Swiss firm wiped $ 4.8 billion from its market capitalization on Monday. Its shares fell 14% when the bank warned it could take a big hit to its first quarter profits following the liquidation of Archegos, a US-based hedge fund.
He said the losses could be “very large and significant” to his first quarter profits, expected next month.
Archegos, the family office of trader Bill Hwang, was forced to liquidate over $ 20 billion positions in leveraged stocks last week. The fire sale hammered stocks such as ViacomCBS and Baidu and raised alarms in several Wall Street banks.
The bank could face a loss of $ 3-4 billion, the Financial Times reported, citing two sources. The upper end of this estimate would be almost triple its net profit in the first quarter of 2020. From Archegos transactions, the banking sector could take a total blow of up to $ 10 billion, JPMorgan analysts have estimated.
Bloomberg noted that this only adds to management’s scrutiny, after several other mistakes at investment banking and beyond, including exposure to the Café Luckin Inc. fraud.
Gottstein is expected to remain CEO, people told Bloomberg.
The bank’s latest issues could also jeopardize its planned share buyback, potentially suspending it a second time, Bloomberg reported, as losses could threaten the bank’s dividend payout.
Credit Suisse declined to comment on the potential fallout from the transactions.