Credit Suisse bank (NYSE:CS) is warning of "significant losses" due to its exposure to the margin call default of hedge fund Archegos Capital Management.
Credit Suisse has said its first quarter results could suffer a material impact after the bank started exiting positions after a U.S.-based hedge fund defaulted on margin calls it made.
Switzerland’s second biggest bank said the unnamed hedge fund (widely reported to be Archegos Capital Management) defaulted on margin calls made last week by Credit Suisse and other major banks.
A margin call is a demand from a broker to add more money to an account to cover potential losses.
Following the failure of the hedge fund to meet its margin commitments, Credit Suisse and several other banks are in the process of exiting those positions. Credit Suisse said it would provide an update on the matter and its impact in coming weeks.
The warning of substantial losses is a further blow to Credit Suisse, which is considering compensating investors hit by the collapse of funds linked to insolvent finance firm Greensill.
The Swiss lender earlier in March closed around $10 billion of supply-chain finance funds that bought notes from Greensill. Of this, $3.1 billion has been repaid and more than $1.2 billion in cash remains in the funds, leaving more than $5 billion outstanding.
