The Swiss bank was prepared to extend enormous leverage to Archegos, reportedly for an embarrassingly low potential payoff.

Credit Suisse took in just 16 million Swiss francs ($17.5 million) in fees from Archegos, the «Financial Times» (behind paywall) reported on Monday. This pales in comparison to the more than 3.54 billion francs in revenue that Credit Suisse's wider investment bank generated during the first quarter of this year alone. 

The Swiss bank was thrown into turmoil when family office-hedge fund's collapse in March incurred a 4.4 billion franc hit. Combined with Greensill, it makes for the worst crisis Credit Suisse Chairman António Horta-Osório has faced. Amid a blow-out first quarter, the Swiss lender was forced to tap its anchor investors for a quick infusion of cash to pad its capital.

Thinner Margin Held

The bank held just ten percent margin for instruments it traded with Archegos, according to «Risk.net» (behind paywall), less than the 15 percent that is required of U.S. houses. Deutsche Bank and Goldman Sachs, which both escaped their prime brokerage dealings with Archegos relatively unscathed, held collateral of more than 20 percent, reported the publication, which evaluated regulatory filings.

Credit Suisse pledged its prime brokerage arm «will be resized with a primary focus on continuing to serve our most important franchise clients,» in its quarterly report. The bank had effectively turned up the risk dial in the first quarter, with risk-weighted assets surging by ten percent to nearly 303 billion francs amid its business growth.

Risk Focus Flagged

This metric is now being scaled back, which means taking 10 billion on risk-weighted assets out of the investment banking unit. After Credit Suisse's top risk manager as well as its board overseer stepped down, Horta-Osório said he is making risk-taking a key focus in the bank's recovery bid. «I firmly believe that any banker should be, at heart, a risk manager,» he said.

«Together with the board and management, I will have a thorough look at how risks are being assessed, managed and controlled,» the ex-Lloyds boss told Credit Suisse shareholders on Friday, when he took over from long-standing Chairman Urs Rohner.