Summary List Placement
The Credit Suisse managing directors who dialed into a call last Monday afternoon with the bank’s chief executive and head of investment banking could not conceal their frustration.
CEO Thomas Gottstein and investment banking chief Brian Chin had convened the conference to take questions about how they planned to contain losses stemming from the spectacular blowup of Archegos Capital Management, one of the Swiss bank’s clients. At Archegos, a family office founded by the hedge-fund billionaire Bill Hwang, $8 billion in assets were vaporized when massive, concentrated bets held in swaps positions suddenly moved against it.
Dialed in from across the globe, the managing directors demanded to know how their bosses let the bank get so exposed to a mess that blew a multibillion-dollar hole in the balance sheet, according to a person on the call. They asked question after question in a tone that varied from pointed to aggressive: How could the bank’s executives have let this happen? Why was Credit Suisse so concentrated in one client? Why wasn’t it hedged? Who knew what, and when did they know it?
One person on the call bluntly asked if the losses would affect their bonuses, which can make up a huge proportion of managing directors’ total compensation. (Bonuses may already have been a sore subject, given the bank rewrote the structure for cash payouts in investment banking and capital markets last year.) Gottstein and Chin responded with a call for solidarity across business lines, a nonanswer that eroded their credibility, the person on the call told Insider.
By the end of the roughly 40-minute call, Gottstein’s tone turned flat and resigned, this person said. And Chin had left managing directors — the cadre of most senior dealmakers, rainmakers, and other leaders across divisions below the C-suite — with more questions than answers.
The Swiss bank had just told investors the month before that it had to freeze $10 billion of supply-chain finance funds linked to Greensill Capital over valuation concerns, a fiasco that has led the bank to reactivate a special crisis committee to oversee issues involving the now-insolvent lender, Bloomberg reported. (At least one person raised the Greensill ordeal on Monday’s call, the person on the call said.)
Archegos and Greensill followed a string of other disasters for the Swiss bank. In fall 2019, Credit Suisse found in an investigation that its chief operating officer had ordered an …read more
Source:: Business Insider