Brian Chin’s post was already in focus in the Archegos debacle. Now, according to a media report, he is leaving the big bank. He shouldn’t be the last victim.
The head of the Credit Suisse Group’s investment bank, Brian Chin, stumbles upon this Archegos-Debakel. He leaves the bank like «Bloomberg»Reported. Chin will leave the company as part of a major restructuring. The Sunday newspaper reported on major restructuring over the weekend.
Chin’s departure was announced Tuesday by people who were familiar with the matter but did not want to be identified, according to the report. Those in charge of the bank would also have one Replacement of the head of risk Lara Warner discuss while they would spare bank boss Thomas Gottstein. As certain media reports, Credit Suisse President Urs Rohner could also resign before his last general meeting. It would be a strong sign to symbolize a new beginning. But it is unlikely to get that far.
Chin has headed the investment bank since last year. When he leaves, it is the second castling in a managerial position within a short period of time. 43-year-old Chin’s department was the business relationship with the finance manager Bill Hwang received, because of the threat of billions in losses.
The big bank only had one two weeks ago Change to a high-level managerial position. Because of the Greensill debacle, CS’s asset management was reorganized. Eric Varvel had to give up the division. Although he is not leaving the bank, he will have a different position in the future. To take over his position, Ulrich Körner hired again at CS, who had already worked at the bank before.
Dilettante risk management in two scandals could cost 7.5 billion Swiss francs
The bankruptcy of Archegos showed the immense risks that lie dormant in the CS. It’s about opaque but very lucrative deals that allow hedge funds and other major investors to bet way too high on stocks and other securities.
The financial instruments that were used in collapsed hedge funds were so-called equity total return swaps. These are swap transactions that are particularly popular with hedge funds because they allow large bets on stocks without the investment vehicle owning the stocks itself and thus having to disclose them to the stock exchange regulator.
Investors only have a “synthetic” stake in the stocks, as it is called in the jargon. You get cash when stocks rise and dividends flow. The bank, in turn, collects fees. In order to additionally drive the bets on the stocks, the banks give the investors additional loans. As can be heard from inside Credit Suisse, the bank is said to have given the hedge fund nine times the leverage. That means: For every million dollars of own money there is an additional nine million dollars in loans – although one should speak of billions at Archegos.
The Greensill Fund scandal could also be very expensive. This raises the question of the technical skills of those responsible for CS. Actually, this business should only be about comparatively low-risk lending against supplier credits. The loans were also secured by credit insurance. But the credit insurances could prove to be worthless, because when the funds are wound up, it is not the Credit Suisse funds that are the policyholders, but the Greensill Bank. The bank has now admitted that itself. However, Greensill Bank has collapsed and is under bankruptcy protection. The fact that Greensill-Bank is a policyholder is likely to be a rookie mistake that Credit Suisse is responsible for.
A bank spokeswoman says: “In the longer term, we expect that most of the investments will be repaid in the liquidation process. We have other means at our disposal in the event that this should be necessary, including possible legal action. ” In the short term, however, it is foreseeable that the bank will have to compensate the funds’ customers for this malpractice. Cost point 2.5 billion francs.
Further measures likely
From those around the board of directors it is also heard that the discharge of the executive bodies may not be put on the agenda at the upcoming general meeting. With this, the board of directors should anticipate those shareholders who would have refused discharge anyway.
In view of the large losses and the shrinking capital base, capital measures are also on the agenda. The first thing to do is to cancel the share buyback program, which the bank has underway with a volume of 1.5 billion. The bank could also call off the promised increase in the dividend.
Published: 04/05/2021, 11:30 PM
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