Swiss Investbank Credit Suisse calculated losses from the actions of the trader Bill Kill, nicknamed “Tigrenk with Wall Street”, and his Archegos Hedge Foundation, says in a statement of financial holding.
Credit Suisse losses for the first quarter of 2021 amounted to 4.4 billion Swiss francs (4.7 billion dollars). Most of them became a consequence of Hwag actions, whose fund actively collaborated with Investbank.
As a result, Credit Suisse will not be able to pay dividends to shareholders, suspends the stock redemption program (discussed as an alternative to dividends) and dismisses two top managers responsible for failure.
Archegos Capital Management Hedge Foundation was founded by a trader and professional billing assets of Bill Killing, which is called “Tigrenk with Wall Street” due to the fact that at the beginning of the career he managed the Tiger Asia Foundation.
Archegos strategy was built on the purchase of swaps on total income – derivatives manufactured by large banks and investment companies. Their meaning is that the buyer pays a regular prize for the right to receive and dispose of the revenue from the ownership of basic assets – conventional stock exchange tools. In case the basic assets are cheaper, the swap holder pays its issuer part of the difference.
Archegos bought swap, the cost of basic assets for which several times higher than the size of the fund’s own funds. After a sharp drop in their price, the Fund could not fulfill obligations to the issuers of swaps and was forced to sell basic assets than provoked the collapse of the US stock market.
Investigation of the activities of Archegos, from which not only Credit Suisse suffered, but also other large banks that have produced swaps have already occupied the US Securities and Exchange Commission (SEC).