Global banks’ losses from the Archegos Capital implosion soars past £7bn
Archegos Capital sent ripples across the world last month when it hit the buffers
Banks’ losses from the Archegos Capital hedge fund implosion have soared past £7billion after UBS and Nomura became the latest to report the damage they took.
Japan’s Nomura revealed a £2.1billion hit yesterday and suspended its head of prime brokerage, Dougal Brech.
UBS also unveiled a £619million Archegos loss. Credit Suisse has already admitted a £3.9billion hit, while Morgan Stanley lost £655million.
And toll keeps mounting – Japanese lenders MUFG and Mizuho are expected to report that Archegos cost them around £280million in the first three months of this year.
Archegos, which invested the money of financier Bill Hwang, sent ripples across the world last month when it hit the buffers.
It put a substantial amount in a few stocks which were on the slide but in order to buy more of these stocks, it had borrowed money from eight banks.
When those banks realised the stocks were falling, they grew worried that Archegos wouldn’t be able to pay its loans back, so they began to sell the stocks they held on the hedge fund’s behalf.
The fire-sale has resulted in heavy losses for most involved, except Goldman Sachs and Wells Fargo.