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    CSGN   CH0012138530

CREDIT SUISSE GROUP AG

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Credit Suisse : Archegos fallout shows big banks need to be resilient, Swiss cenbank says

06/17/2021 | 02:17am EDT
General view shows the building of the Swiss National Bank in Zurich

ZURICH (Reuters) - Losses from exposure to U.S.-based investment firm Archegos have demonstrated the need for "too big to fail" capital requirements to ensure adequate resilience at Credit Suisse and UBS, the Swiss National Bank (SNB) said on Thursday.

"This incident demonstrates that banks are exposed to significant risks that are not necessarily related to macroeconomic or system-wide financial shocks but may nevertheless lead to large losses," the central bank said in its 2021 financial stability report.

The SNB noted both banks, "but in particular Credit Suisse", had suffered large losses.

UBS reported a $774 million loss from Archegos.

Meanwhile, Credit Suisse's investment bank lost more than $5 billion from the collapse of Archegos, just on the heels of the collapse of over $10 billion of client investments linked to insolvent British financier Greensill.

While the SNB said Credit Suisse's direct credit exposure to Greensill was significantly lower than its exposure to Archegos, it said the bank could yet incur costs from potential compensation claims filed by clients.

"Whenever the default of a single counterparty materially affects a bank, the matter usually has an operational risk dimension and the internal control processes of the bank need to be reviewed," the Swiss central bank added.

Both banks had proven to be resilient in the current challenging economic environment, which presented several risks for broader financial stability, SNB said.

Further coronavirus mutations which could require additional or longer-lasting containment measures could delay further recovery or even lead to a renewed recession, impairing banks' credit portfolios, the central bank added.

The SNB pointed to signs of stretched valuations on stock, credit and real estate markets in a number of countries, as well as historically high global public and corporate debt.

(Reporting by Brenna Hughes Neghaiwi; Editing by Riham Alkousaa, Caroline Copley and Shounak Dasgupta)


© Reuters 2021
Stocks mentioned in the article
ChangeLast1st jan.
CREDIT SUISSE GROUP AG -0.04% 9.106 Delayed Quote.-20.09%
UBS GROUP AG -0.40% 14.94 Delayed Quote.20.29%
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Financials
Sales 2021 22 619 M 24 980 M 24 980 M
Net income 2021 444 M 491 M 491 M
Net Debt 2021 - - -
P/E ratio 2021 55,4x
Yield 2021 1,86%
Capitalization 21 957 M 24 231 M 24 249 M
Capi. / Sales 2021 0,97x
Capi. / Sales 2022 0,99x
Nbr of Employees 49 090
Free-Float 90,1%
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Number of Analysts 23
Last Close Price 9,11 CHF
Average target price 11,30 CHF
Spread / Average Target 24,1%
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Thomas Gottstein Chief Executive Officer
David Richard Mathers Chief Financial Officer
António Mota De Sousa Horta-Osorio Chairman
James Walker Chief Operating Officer
Thomas Grotzer Global Head-Compliance
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