One of the existing members on his team was in charge of daily monitoring of Hwang's firm's activity, according to an unnamed Credit Suisse executive. Credit Suisse Group AG will take a 4.4 billion franc (4.7 billion) writedown tied to the implosion of Archegos Capital Management and replace more than half a dozen executives in response to the. The new job encompassed overseeing the risk of a number of clients, including Archegos.His sales function ended with he took on the oversight role in the prime brokerage unit, Bloomberg said. Switzerland’s Credit Suisse said on Tuesday it will take a 4.4 billion Swiss franc (4.7 billion) writedown connected to its exposure to US-based hedge fund Archegos Capital Management - forcing Credit Suisse to cut its dividend and suspend share buybacks. Shah had been with the company for more than 20 years and helped to cultivate the relationship with Archegos as the fund grew. The most significant component of the write-down was associated with its acquisition of Donaldson, Lufkin & Jenrette, which Credit Suisse bought for 11.5 billion in 2000 as it looked to bolster.
More details are likely to be disclosed when Credit Suisse reports Q1 earnings on Thursday.As reported earlier, the bank's head of risk and compliance, Lara Warner, will also be leaving the bank, along with the head of its investment bank, Brian Chin.The Archegos situation, along with Greensill Capital's collapse in March, thrusts Credit Suisse's risk management practices into the spotlight.The stock is down more than 11 per cent this year, compared with an 18 per cent gain at local rival UBS Group. Shah, like a number of other Credit Suisse executives, has been forced to step down after the debacle, Bloomberg reports, citing an internal memo from early April. Credit Suisse shares fell 0.5 per cent at 9:12am (11:12am UAE time) in Zurich trading.But the unusual practice of transferring a salesperson to risk management raises questions of whether Credit Suisse managers prioritized revenue growth over managing risk to the firm. Credit Suisse bank plunged into its first quarterly loss for five years today. To be clear, the salesman who led prime-services risk, Parshu Shah, hasn't been accused of impropriety in previous trades with Archegos.Almost a month ago, Archegos's swap deals collapsed, burdening Credit Suisse with a $4.7B writedown, likely the biggest bank loss resulting from the failure at Bill Hwang's family office.In a departure from the usual Wall Street practice of tasking sales staff to win deals and risk controllers to keep them in check, Credit Suisse ( CS -0.1%) executives had assigned its point salesman to Archegos Capital on its swaps desk the job of overseeing risk-taking in the broader prime brokerage unit, Bloomberg reports, citing people familiar with the matter.
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