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Bloomberg

Credit Suisse reduces risk as defaults rise in the aftermath of scandals

(Bloomberg) – Credit Suisse Group AG is working to prevent top bankers from fleeing to competitors and dramatically reduce risk as new chairman Antonio Horta-Osorio seeks to recover from a string of scandals. ., a funder of Lex Greensill’s collapsed supply chain finance empire, and it temporarily prevents clients from withdrawing all of their money from a fund that invests with Renaissance Technologies after the strategy rushes through. and that investors rushed for the exit. performers to stabilize the business as defections mount following the Greensill debacle and the implosion of Archgos Capital Management by Bill Hwang, which contributed to a pre-tax loss of CHF 900 million ( $ 1 billion) in the first quarter. kind of like a basket case right now, ”Octavio Marenzi, managing director of capital markets advisory firm Opimas, said in a telephone interview on Friday. “The Archegos thing is really bad, and what happens after an event like this is people start to pick on them. They are considered the weakest children in the class. Some of the company’s top talents are rushing for exits. His main financial services banker, Alejandro Przygoda, is leaving for Jefferies Financial Group Inc., along with at least three colleagues, people familiar with the matter said. This follows the recent departures of at least four other members of the group of financial institutions to competitors such as Barclays Plc., Bank of America Corp. and Goldman Sachs Group Inc. Shares of Zurich-based Credit Suisse have fell about 14% this year. only drop among 35 companies in Bloomberg Europe 500 Banks & Financial Services index, which jumped 26%. Credit Suisse will no longer do new business with SoftBank, people with knowledge of the situation said, a move that could have repercussions on the Bank business investment. SoftBank has been a prolific trader, and last year Credit Suisse and other banks held around $ 8 billion in SoftBank shares as collateral, pledged by founder Masayoshi Son. was not immediately available for comment, while Credit Suisse declined to comment. Horta-Osorio, 57, who succeeded Urs Rohner as chairman last month, pledged a full review after the bank was forced to suspend billions of dollars in funds it managed with Greensill and took a $ 5.5 billion blow to Archegos, raising questions about Credit Suisse conducted an internal review of Greensill funds after allegations of potential conflicts of interest involving SoftBank last year. A number of companies in SoftBank’s portfolio received loans through supply chain funds at Credit Suisse, while SoftBank was also an investor in Credit Suisse funds. The overlapping financial relationships raised questions as to whether SoftBank was using funds from Credit Suisse to support investments in the Vision Fund, including Greensill Capital, in which it had a substantial stake. its $ 1.5 billion Greensill hold almost zero after Credit Suisse was forced to unwind its four Greensill-linked funds in March, people familiar with the matter said. SoftBank is now seeking $ 1.15 billion in receivables in Greensill’s insolvency proceedings. Credit Suisse has marketed supply chain finance funds as one of its safest investments as funds were insured and the loans they held secured by bills usually paid within weeks. But as the funds became a $ 10 billion strategy, they strayed from that rhetoric and much of the money was loaned through Greensill against expected future bills, for sales that were just planned. The debacle is also at play in claims that Credit Suisse executives ignored warnings from colleagues about ailing steel tycoon Sanjeev Gupta as they funneled $ 1.2 billion in client funds to his businesses. Bankers in Credit Suisse’s commodities trade finance unit blacklisted Liberty Commodities Ltd. of Gupta in 2016 because they suspected some of his transactions were not legitimate, according to people familiar with the matter. his companies through a suite of investment funds, which eventually reached $ 10 billion, they reported their concerns to heads of compliance and the division that housed the loans, one of the people said. . Internal concerns about Gupta’s business add another twist to the debacle stemming from the March implosion of Greensill, the finance company at the center of the three-way relationship. Britain’s Serious Fraud Office is investigating Gupta’s group of companies for suspected fraud, including in its funding deals with Greensill, according to a May 14 statement. “We are currently focusing our efforts on collecting money from our investors,” Will Bowen, a spokesperson for Credit Suisse in London, said in an emailed statement, adding that the bank’s internal investigation will focus on “all matters” related to funds. “We are committed to learning lessons and will share relevant lessons learned when appropriate.” Andrew Mitchell, a spokesperson for the Gupta Family Group Alliance, or GFG Alliance, a collective of companies linked to Gupta, including Liberty Commodities, has denied any Credit Suisse temporarily prohibits clients from withdrawing all of their cash from a fund that invests with RenTec. The bank invoked a so-called withholding clause, after the assets of the CS Renaissance Alternative Access Fund fell to around $ 250 million this month from around $ 700 million at the start of last year , according to people familiar with the matter. While investors will receive 95% of their redemption requests after two months, the remaining 5% is expected to be paid in January, after the fund’s year-end audit, the sources said. with the decline of the Renaissance Institutional Diversified Alpha Fund International in which it invests, the people said. Renaissance, considered one of the world’s most successful quantitative investment firms, was rocked by billions of dollars in buybacks earlier this year after unprecedented losses in 2020. Three of its funds open to outside investors have fell to double digits last year. and Renaissance declined to comment. More stories like this are available at bloomberg.com Subscribe now to stay ahead with the most trusted source of business news. © 2021 Bloomberg LP


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About Johnnie Gross

Johnnie Gross

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