When Credit Suisse Group AG’s Archegos disaster hit, its traders were in the midst of racking up a $2.65 billion quarter. Less than two years later, they produced a $96 million quarter.
(Bloomberg) — When Credit Suisse Group AG’s Archegos disaster hit, its traders were in the midst of racking up a $2.65 billion quarter. Less than two years later, they produced a $96 million quarter.
That 96% plunge underscores the end of the Swiss firm’s ambitions as a global investment bank. Ever since the near-simultaneous implosions of Archegos Capital Management and Greensill Capital pushed the lender into chaos, it has sought to reduce risk in the volatile trading business and pivot further to wealth management.
That slide only accelerated last quarter. Fixed-income, a business where peers recorded double-digit gains, slumped 84% from a year earlier in dollar terms. Equities fared even worse, reporting a 96% decline.
“We are concerned about what will be left” of the trading operation that Credit Suisse intends to keep, JPMorgan Chase & Co. analyst Kian Abouhossein wrote in a note to investors.
Credit Suisse, which on Thursday posted its worst annual performance since the financial crisis and warned of another loss this year, blamed the slump in part on the impact of credit downgrades, which drove clients away from doing business with the firm. Along with the decision to exit the business with hedge funds and allocate less capital, it left the Swiss lender with the worst trading performance of any major investment bank by a wide margin.
Against that backdrop, the 59% decline in fees from advising on deals and capital raisings was a bright spot, and roughly in line with the broader industry. That business, however, will largely be spun out as part of the bank’s restructuring.
–With assistance from Macarena Muñoz.
More stories like this are available on bloomberg.com
©2023 Bloomberg L.P.