Credit Suisse receives $ 4.7 billion from the Archegos hedge fund scandal

A Swiss flag flies over a Credit Suisse sign in Bern, Switzerland

FABRIC COFFRINI | AFP | Getty Images

Swiss credit announced several high-profile departures on Tuesday and proposed a dividend cut heavy losses from the Archegos Capital saga.

The Swiss lender now expects a pre-tax loss of around 900 million francs (960.4 million US dollars) for the first quarter after taking on a burden of 4.4 billion francs as a result of the scandal.

“The significant loss in our Prime Services business due to the failure of a US-based hedge fund is unacceptable,” CEO Thomas Gottstein said in a trading update.

Brian Chin, CEO of the Investment Bank, and Lara Warner, Chief Risk and Compliance Officer, will be stepping down from their roles with immediate effect, the bank said.

Last week, Credit Suisse announced that it would be part of the US hedge fund Archegos Capital collapses. The bank was forced to dump a sizeable amount of shares in order to sever ties with the troubled family office.

The board of directors has also waived its bonuses for the 2020 financial year, the bank announced on Tuesday. Chairman Urs Rohner gave up his “chairwoman” of 1.5 million francs.

At its Annual General Meeting on April 30, Credit Suisse, together with the amended compensation report, will propose a dividend of CHF 0.10 gross per share.

“In particular, following the major US hedge fund issue, the board of directors is changing its proposal to distribute dividends and withdrawing its proposals for variable compensation for the board of directors,” the Swiss lender said in a trade update.

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The company has suspended its share buyback program and does not intend to resume buying shares until it has returned to its target capital ratios and restored its dividend.

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