Credit Suisse has announced the growth of SFr1.7bn ($ 1.9bn) because it calculates the cost of backlogs related to Archegos Capital and Greensill Capital which a Swiss financial officer is investigating.
The Swiss lender said on Thursday it had set aside $ 203m with its existing shareholders to increase its volume between 12.2% to 13%.
Credit Suisse is grappling with a major loss of business for more than a decade from the Archegos family office last month, which came weeks after he was forced to suspend $ 10bn of Greensill’s joint venture.
Individually, Finma, Switzerland’s financial adviser, announced Thursday that it has filed a lawsuit against Credit Suisse over potential problems with Archegos.
The regulator had already begun investigating the loss of Credit Suisse’s Greensill.
“As a result of both cases, Finma has in recent weeks ordered the implementation of various shortcuts,” the official said.
“This includes organizational and risk reduction mechanisms and payments and remittances or reductions. The self-defense and short-term measures they want to achieve are to repay and help strengthen what the bank has already taken. ”
This came as the second largest bank in Switzerland reported a shortfall of SFr757m ($ 825m) in the first quarter, after warning earlier that pre-tax losses could be as high as SFr900m.
The bank would have been saying a good quarter for a decade due to a 31% annual increase, but was forced to write SFr4.4bn on losses related to Archegos Capital.
Thomas Gottstein, head of Credit Suisse, said: “The losses we have reported this quarter, as a result of this issue, are not being addressed.” “Together with the regulatory body, we have taken steps to address the problem as well as the issue of procurement finance.”
The bank also said it had filed two US $ 500m domestic cases, while warning that the complaint would reach $ 1.3bn.
Credit Suisse has been affected by the twin crisis around Greensill and Archegos in the past two months.
Bank share interest rates have dropped by 30% since March 1, when they disrupted the Greensill-linked financial group. Credit Suisse executives have speculated that customers who have deposited the money may lose $ 3bn after several companies that paid off the money showed that they could not or would not pay.
A few weeks later, Credit Suisse was one of the few banks in the world to be affected by the actions of their clients in Archegos, a family office run by former Bill Hwang hedge fund.
The Swiss lender later recorded $ 4.7bn in the collapse of Archegos – the worst commercial loss for less than a decade.
The complaint has prompted a series of international investigations, with the Credit Suisse board launching its own internal investigation. The bank has also announced the departure of senior executives and supervisors in recent weeks, including Lara Warner, chief of risk and compliance, and Brian Chin, chief financial officer.
Outgoing Lloyds Banking Group CEO António Horta-Osório is due to be confirmed to hold the new Credit Suisse chair at the bank’s next AGM next Thursday.
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