Two senior Credit Suisse executives are leaving the bank, which has announced $4.7bn of losses from the blow-up of Archegos Capital following the recent crisis involving Greensill Capital.
Lara Warner, the group’s chief risk and compliance officer, and Brian Chin, head of the investment bank, are set to depart, Credit Suisse said on Tuesday. Warner’s removal was first reported by the Financial Times.
In a separate trading update, Credit Suisse said it stood to lose about $4.7bn from the implosion of Archegos, a family office run by former hedge fund manager Bill Hwang, slightly higher than earlier estimates. That would push the bank to a first-quarter loss of about SFr900m ($960m).
As a result, Credit Suisse suspended its SFr1.5bn share buyback programme and cut its dividend by two-thirds to SFr0.10 per share. The group also announced two investigations by external parties into the events leading up to the Archegos and Greensill losses.
The bank’s senior executives have had their bonuses for the year removed, while outgoing chair Urs Rohner waived his SFr1.5m chair fee after facing criticism over his unchanged total pay of SFr4.7m for the year.
Credit Suisse was one of several lenders that acted as prime broker to Hwang.
“The significant loss in our prime services business relating to the failure of a US-based hedge fund is unacceptable,” said Thomas Gottstein, chief executive. “In combination with the recent issues around the supply chain finance funds, I recognise that these cases have caused significant concern amongst all our stakeholders.”
The Archegos losses followed the suspension last month of a series of supply-chain finance funds Credit Suisse offered its clients that were run by Greensill Capital. Credit Suisse has calculated its clients could lose up to $3bn from those funds.
The Archegos and Greensill crises have raised questions over the risk management processes within the Swiss bank.
The FT reported last month that Warner signed off a $160m bridging loan to Greensill after risk managers who raised concerns were overruled.
The prime brokerage division at the centre of the Archegos debacle sat within Chin’s investment bank. His departure was first reported by Bloomberg.
Credit Suisse started selling blocks of shares linked to the liquidation of Archegos on Monday, more than a week after some of its rival lenders to the collapsed family office. The blocks of shares in ViacomCBS, Vipshop and Farfetch were valued at about $2.3bn.
Both Warner and Chin were given expanded briefs by Gottstein last summer as part of his first big overhaul of the group, which was designed to reduce costs and increase efficiencies.
Warner, who had previously been chief risk officer, was also given responsibility for compliance. At the time of the restructuring, Gottstein said the shake-up would “provide resilience”.
The bank has lurched from one crisis to the next over the past few years. In the past year alone, it has been caught up in alleged frauds at Chinese coffee house chain Luckin Coffee and German payments company Wirecard.
It revealed a potential $680m hit from crisis-era US mortgage-bond litigation and faces criminal charges from Switzerland’s federal prosecutor over dealings with Bulgarian mafiosi engaged in cocaine smuggling.
At the start of the year, it was forced to write down $450m on its investment in hedge fund York Capital.
Warner joined Credit Suisse as an analyst from Lehman Brothers in 2002 and rose to become chief finance officer of the investment bank before taking on group-level compliance and risk management roles.
The Australian was a close confidante of former chief executive Tidjane Thiam.
As part of last year’s restructure, Chin was made head of the investment bank, which combined Credit Suisse’s previous global markets, investment banking and capital markets, and Asia-Pacific markets business lines. Chin had previously been head of global markets.
Christian Meissner, Credit Suisse’s co-head of international wealth management investment banking advisory, will replace Chin on May 1.
Warner, who will leave on April 6, will be replaced by Joachim Oechslin as interim chief risk officer and Thomas Grotzer as interim global head of compliance.
Credit Suisse’s share price is down by a quarter since the start of March, when it suspended the Greensill-linked supply-chain finance funds.
Andreas Venditti, an analyst at Vontobel, said: “While the short-term impact seems less severe than feared, the full consequences from the reputational loss will only be visible over time.”
Warner declined to comment. Chin did not respond to requests for comment.
Additional reporting by Tabby Kinder in Hong Kong
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2021-04-06 07:00:06Z
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