Losses at Credit Suisse linked to the meltdown of Archegos Capital Management will top 4.4 billion Swiss francs ($4.7 billion), the bank said on Tuesday, as it slashed its dividend and detailed executive departures following two crises in the last month.
Shares in Credit Suisse CSGN, +1.33% fell 2% in early European trading before paring losses and settling below flat. The stock is now down near 20% since March 29, when the bank said that the default of a U.S. hedge on margin calls could lead to a “highly significant and material” impact on quarterly results.
Credit Suisse said that it now expects to report a 900 million franc loss for the first quarter of 2021, driven by a 4.4 billion franc charge related to losses from the fire sale at banks linked to Archegos in late March. “This will negate the very strong performance that had otherwise been achieved by our investment banking businesses,” the Swiss group said in a trading update.
The bank also announced plans to slash its dividend to 0.1 francs per share and said that both its investment banking head, Brian Chin, and chief risk and compliance officer, Lara Warner, would step down from their roles. The dividend cut and executive departures come after two crises for Credit Suisse in March.
Earlier in the month, before the meltdown at Archegos, Credit Suisse froze $10 billion in funds connected to Greensill Capital, a now-insolvent supply-chain finance company.
Credit Suisse’s update came on an otherwise buoyant day of trading in Europe. The pan-European Stoxx 600 SXXP, +0.71% rose 0.8% while both London’s FTSE 100 UKX, +1.26% and Frankfurt’s DAX DAX, +0.92% climbed more than 1%. The CAC 40 PX1, +0.62% in Paris lifted 0.7%.
Dow futures YM00, -0.08% were pointing down around 20 points, set for a soft open after climbing more than 370 points on Monday to close at a new high of 33,527.
Analysts noted that the continued spread of coronavirus infections in Europe remains a wider concern for markets in the week ahead.
“It’s likely that the COVID pandemic will continue to dominate given the jitters in multiple countries over the rising case counts,” said Henry Allen, an analyst at Deutsche Bank.
“Europe has already been shifting towards tougher restrictions, with the French lockdown beginning on Saturday,” Allen added. “The main exception to this pattern has been the U.K. however, which has one of the most advanced vaccination programs in the world.”
Stocks in Asia moved lower, with the Shanghai Composite SHCOMP, -0.04% dropping 0.4%. “One factor which seems to be weighing on markets in the region,” said Allen, is reports that the Chinese central bank has asked lenders to curtail credit for the remainder of the year, according to Bloomberg.
BP BP, +3.21% was a standout in London trading, with shares in the oil major rising 3% after the group said it expects to hit its $35 billion net debt target in the first quarter of 2021, earlier than expected and paving the way for share buybacks. The group’s net debt at the end of 2020 was $38.9 billion.
Shares in French biotech Valneva VLA, +3.36% climbed near 6%, after the group reported positive early results for its COVID-19 vaccine.