The Swiss bank's disastrous dealings with Archegos as well as a pullback of its risk-taking have cost it league table rank.
Credit Suisse Thomas Gottstein in April flagged the review following the Swiss bank's «unacceptable» Archegos losses. The bank later shackled risk-taking amid the wider reevaluation of its strategy, culture, and appetite for risk, following both the hedge fund-related losses as well as Greensill.
The move has cost Credit Suisse league table standing: the Zurich-based bank slid to ninth place thus far this year, from sixth in 2020, according to data prepared for and reported by the «Financial Times» (behind paywall). This indicates Credit Suisse's piece of the fee pool – J.P. Morgan estimated the bank earned $900 million last year from prime broking – will shrink dramatically.
Early Warning Sign
Credit Suisse reportedly got a taste of what prime brokerage clients like Archegos could wreak last year, when it racked up $200 million in losses following troubles with Malachite, another hedge fund. The spring 2020 incident prompted changes in risk-monitoring which still haven’t been fully implemented at the Swiss bank.
It still isn’t clear why Credit Suisse was so slow in offloading the Archegos collateral compared with other banks like Deutsche Bank and Goldman Sachs. Both rivals escaped their prime brokerage dealings with the same client relatively unscathed. Crosstown rival UBS admitted it will suffer more than $800 million in losses with Archegos, spread over two quarters.
