Archegos fallout: Losses exceed estimates; Global banks bled $10 billion and more expected
Archegos fallout: Losses exceed estimates; Global banks bled $10 billion and more expected
Image by Gerd Altmann from Pixabay

Few days after the Archegos Capital fiasco, a report by Reuters had estimated the losses due to this fallout at $6 billion. But after calculating the losses reported by Credit Suisse, Morgan Stanley, Nomura, and UBS, the losses have now crossed $10 billion.

On Tuesday, Swiss Bank UBS reported a loss of $774 million in revenue due to the default by the Archegos Capital. Meanwhile, the investment bank reported a net income of $1.8 billion for the first quarter of 2021 despite the Archegos Capital fallout.

But not everyone is that lucky, due to Archegos Capital fallout, Credit Suisse reported a decline of $4.7 billion in its profit.

Morgan Stanley reported $911 million in first-quarter losses due to Archegos Capital Management fallout. Meanwhile, it is much lower than Credit Suisse. Meanwhile, according to Japan Times, Nomura Holdings Inc. will book losses of $2.9 billion in the case of Archegos collapse.

In addition, the brokerage arm of Japan's Mitsubishi UFJ Financial Group on Tuesday flagged potential losses of around $300 million.

Despite being the biggest prime broker to Archegos, Morgan Stanley’s losses are not as much as Credit Suisse and Nomura.

Other than losses, yet another collateral damage of this incident was the board of directors of Credit Suisse deciding to pull up two top executives from the board for this fallout. This has resulted in Brian Chin, CEO of the Investment Bank and Lara Warner, Chief Risk and Compliance Officer stepping down from their respective positions.

In addition to Archegos Capital Management fallout, Credit Suisse has an exposure to Greensill Capital as well. Due to these fallouts, a pension fund has filed a lawsuit against the investment bank. The fund is alleging violations of federal securities laws by the investment bank.

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