Credit Suisse warns of material loss due to default of US-based hedge fund
Credit Suisse confirms that a significant US-based hedge fund defaulted on margin calls made last week by Credit Suisse and certain other banks. Following the failure of the fund to meet these margin commitments, Credit Suisse and a number of other banks are in the process of exiting these positions.
While Credit Suisse says it it is premature to quantify the exact size of the loss resulting from this exit at this point, it could be highly significant and material to its first quarter results.
This is the full announcement:
“A significant US-based hedge fund defaulted on margin calls made last week by Credit Suisse and certain other banks. Following the failure of the fund to meet these margin commitments, Credit Suisse and a number of other banks are in the process of exiting these positions. While at this time it is premature to quantify the exact size of the loss resulting from this exit, it could be highly significant and material to our first quarter results, notwithstanding the positive trends announced in our trading statement earlier this month. We intend to provide an update on this matter in due course”.
When Credit Suisse posted its 4Q20 results announcement on February 18, 2021, it noted in its outlook statement that Credit Suisse has seen a strong start to 2021. On March 16, 2021, Credit Suisse said that this continued over the last month, with the Group achieving the highest level of income before taxes in both January and February in a decade.
Back then, Credit Suisse noted that its Investment Bank division was benefitting from a particularly strong performance in capital markets issuance activity and from a continued good performance across sales & trading, with overall Investment Bank year-to-date revenues up over 50% compared to the same period last year.