Archegos Bites The Dust

Issue 64

Multinational Investment Banks Credit Suisse and Nomura found themselves turmoil today after losses at Tiger Cub Bill Hwang’s hedge fund Archegos Capital triggered a book liquidation.  As the fund’s prime brokers find themselves in the middle of a fire sale, the firms have both warned investors that they may book a loss on the quarter ending in 2 days.

Nomura has stated that is was owed $2 billion by a US client which sources familiar with the matter have indicated that the client in question was likely Archegos.

Credit Suisse is facing a potential $30 billion position size liquidation with Archegos. This follow’s Credit Suisse’s losses after the collapse of UK based Greensill. Both Credit Suisse and Nomura’s stock fell around 15%, a record single day drop for Nomura and the biggest drop for Credit Suisse since the market sell off last March.

Filings have also indicated that some bulge bracket primes may have exposure to Archegos’s bad bets including Goldman Sachs, Morgan Stanley, and Deutsche Bank. Prime brokers as an aggregate could be facing exposure in excesses of $100 billion. We'll bring you more on this story as it continues to unfold.

Source: Wall Street Journal