Tag: Credit Suisse (Page 1 of 5)

Credit Suisse is now getting sued for $100 million over an allegedly incorrect margin call by South African hedge fund M1.

“The lawsuit against the Swiss bank adds to a pile of outstanding litigation and regulatory issues UBS has inherited from Credit Suisse after acquiring the bank in March in an emergency takeover,” says Financial Times.

Credit Suisse agreed to pay $388m on 24 July to settle claims with regulators relating to its relationship with hedge fund Archegos, which collapsed in March 2021, costing Credit Suisse $5.5bn.

The M1 claim also stems from its prime brokerage relationship with Credit Suisse, which refers to the services offered by investment banks to hedge funds.

M1 alleged in its claim, which was filed on 4 July in the Commercial Court in London, that Credit Suisse made an incorrect margin call which triggered the sale of stock that the hedge fund had pledged as collateral.

The hedge fund is claiming approximately $108m to replace shares sold by Credit Suisse following the margin call made in 2020, which it said the bank had wrongly calculated and was not in fact due.

A margin call is typically issued by a broker to an investor when the value of shares they have borrowed has fallen.

The investor is typically asked to deposit additional funds or sell shares to raise the percentage of their own money in the account above a certain minimal threshold, called the maintenance margin.

This is an open case and developing story.

The fall of Credit Suisse has sent shock waves throughout the entire financial industry affecting now just investors, but also its workforce.

Also Read: Credit Suisse Warns Investors of Naked Short Covering

Credit Suisse Workforce Gets Laid Off

UBS (NYSE:UBS) CEO warned of a new wave of banking layoffs which have been taking place since June.

Chief Executive Sergio Ermotti warned of painful decisions about job cuts following the takeover of Credit Suisse, which he said he hoped would be formalized later that month, per Reuters.

“We won’t be able to create, short term, job opportunities for everybody. Synergies is part of the story,” Ermotti said at an event organized by the Asset Management Association Switzerland in Bern.

“We need to take a serious look at the cost base of the standalone and combined organizations and create a sustainable outcome,” he added.

“It will be painful.”

Sources warned 10,000 jobs would have to be cut if the two banks combined; we’re now beginning to see the aftermath today.

“When the dust settles down …the best thing for our clients and shareholders and our people is to have the best people in the jobs,” said the UBS CEO.

Swiss newspaper Blick reported in June that each day around 150 people worldwide were resigning from Credit Suisse while one of the two people said they saw about 200 resignations a week.

Credit Suisse bankers, worried about their future are seeking safer employment at competitors, one person said.

People familiar with the matter declined to be named because they are not authorized to speak publicly, per Reuters.

Also Read: Credit Suisse Chairman Blames Collapse on Retail Investors

Credit Suisse Also Fined $388m Over Archegos Collapse

The Swiss bank continues to get hammered as all hell falls upon its compounded scandals and failings.

Financial Times reports Credit Suisse has been fined $388mn by US and British regulators for “significant failures in risk management and governance” related to the collapse of Archegos Capital, which caused a $5.5bn trading loss and helped bring about the demise of the Swiss lender.

The US Federal Reserve imposed a $269mn penalty on the bank for “unsafe and unsound counterparty credit risk management practices”, while the UK Prudential Regulation Authority levied a record £87mn fine, according to a series of co-ordinated statements on Monday.

Swiss supervisor Finma said that Credit Suisse had “seriously and systematically violated financial market law” and that it was ordering corrective measures on its new parent UBS, which rescued its rival in a government-brokered takeover in March according the latest report.

Finma added that it has opened enforcement proceedings against a former employee, but does not have authority to fine financial institutions.

“Credit Suisse’s failures to manage risks effectively were extremely serious, and created a major threat to the safety and soundness of the firm,” said Sam Woods, head of the UK’s PRA.

“The seriousness and widespread nature of those failures has led to today’s fine, which is the largest ever imposed by the PRA.”

Credit Suisse took the biggest trading hit in its 167-year history when Archegos failed in March 2021, with the Swiss bank accounting for more than half of the total $10bn lost by international banks that offered the family office prime broking services.

UBS suffered a $861mn loss.

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Bankers at Credit Suisse (NYSE:CS) are quickly throwing in the towel as hundreds of resignations hit the distressed bank.

Swiss newspaper Blick reported earlier on Wednesday that each day around 150 people worldwide were resigning from Credit Suisse while one of the two people said they saw about 200 resignations a week.

Credit Suisse bankers, worried about their future are seeking safer employment at competitors, one person said.

People familiar with the matter declined to be named because they are not authorized to speak publicly, per Reuters.

UBS (NYSE:UBS) agreed on March 19 to take over its smaller Swiss rival as part of a rescue arranged by the Swiss authorities after a bout of market turmoil brought the struggling lender to the brink of collapse.

Credit Suisse said in April that the bank’s “employee attrition has been higher over the last year,” and that it had just over 48,000 full-time employees at the end of the first quarter and reported 50,480 full-time staff at the end of 2022.

UBS management has also said it would set a “very high bar” when deciding whether to retain any of Credit Suisse’s investment banking staff.

Similarly, about 1,000 First Republic (OTCMKTS:FRCB) employees have lost their job across all of First Republic’s businesses after the JPMorgan takeover.

UBS has said it plans to wind down Credit Suisse’s investment bank, which employs about 17,000 staff, and the Swiss state has pledged 9 billion Swiss franc in guarantees to cover potential losses from the operation.

No day passes without receiving a goodbye email from someone across the bank, one of the two people said.

At the investment bank, calls are often unanswered, he added.

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10,000 People Will Lose Their Banking Job

During the merge of UBS and Credit Suisse sources cautioned that “the talks to resolve the crisis of confidence in Credit Suisse are encountering significant obstacles, and 10,000 jobs may have to be cut” if the two banks combine.

The merged bank will employ 120,000 worldwide, although UBS has already said it will be cutting jobs to reduce costs, per Reuters.

Credit Suisse clients began withdrawing billions of dollars during the first quarter of the year.

In November of 2022, the bank had warned investors in a 6-K filing of potential losses due to naked short covering which has many retail investors speculating the nature of the markets.

Berkshire Hathaway’s Warren Buffett has held discussions with senior Biden administration officials about the banking crisis, a source told Reuters during the time of the merge.

All parties declined to comment on the banking situation.

This is the latest development in the UBS and Credit Suisse merge, but various banks today are laying off staff.

The banking crisis is happening globally with reports of banks such as JPMorgan and Captial One now freezing customer bank accounts.

Read: New Study Shows Nearly 190 Banks on Verge of Collapsing

US Banks Are Now Cutting 3,000 Roles Globally

US banks are now cutting more than 3,000 roles globally in the latest spree.

The US bank’s latest job cuts will hit 3,000 roles globally across most of its key divisions, as it embarks on its second round of redundancies within the space of six months, says FinancialNews London.

Morgan Stanely (NYSE:MS) recently cut around 70 dealmakers in Europe; the latest round of layoffs to hit the Wall Street bank this week.

Managing directors within its investment banking and global capital markets teams in Europe, the Middle East and Africa were informed of job cut decision earlier this week on Monday according to people familiar with the matter.

At the senior level, approximately 10 managing director dealmakers were cut in the region, the people added.

In January, Morgan Stanley’s rival Goldman Sachs laid off more than 3,000 employees and cut executive salaries.

Reuters reported on Friday that JPMorgan (NYSE:JPM) was cutting about 500 employees this week across its various departments, according to a person familiar with the situation who asked not to be identified discussing personnel matters.

The layoffs will affect employees across the bank’s main businesses — consumer, commercial banking, asset and wealth management — as well as technology and operations, the source said.

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