Credit Suisse starts overhaul of risk monitoring after Archegos losses

Credit Suisse has formed a new group to monitor trading risk in its investment bank as it starts to overhaul its controls and processes after losing $5.5bn from the collapse of the Bill Hwang family office, Archegos Capital.

Amelie Perrier will lead the new unit, called counterparty market risk. It will track the trading positions of its major clients and their potential impact on the bank with the aim of preventing another catastrophic loss for the Swiss lender. 

Perrier had been global head of equity market risk and joined Credit Suisse in 2016. Her appointment was announced in an internal memo on Friday, which was first reported by the Wall Street Journal.

Credit Suisse has been reeling this year under the strain of two crises that revealed critical weaknesses in the bank’s risk management and culture. It was forced to raise capital after the prime brokerage unit that services hedge funds lost billions when stock market bets it had financed for Archegos turned sour. 

The trading loss followed the closure of $10bn of supply-chain finance funds at Credit Suisse linked to insolvent finance group Greensill Capital. It could cost the bank’s clients as much as $3bn and is being probed by regulators worldwide.

New chair António Horta-Osório is reviewing the lender’s risk operations and strategic direction. Several executives responsible have left the bank.

Despite extending billions of dollars of credit to Archegos, the FT has reported that Credit Suisse made just $17.5m from the relationship last year. The low level of fees and unexpectedly high risk exposure — estimated at about $20bn — caused alarm among the board and managers, who are investigating the arrangement. The results will be published this summer.

Other lenders including Deutsche Bank and Goldman Sachs also had exposure to Archegos, but had adequate risk controls and held sufficient margin to trade out of the positions without losses.

However, Morgan Stanley, UBS and Nomura lost a collective $5bn.

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