Credit Suisse didn't see the Archegos danger coming. The result was a $5.5 billion loss for the Swiss bank.
In mid-March, shares in ViacomCBS Inc. and Discovery Inc. rocketed skyward. That was great news for Bill Hwang.
His firm, Archegos Capital Management, had borrowed billions from Credit Suisse Group AG to make wagers on a handful of stocks, including the entertainment companies. As is standard practice, Archegos had handed over cash to Credit Suisse to secure its bets. With the stocks more than doubling since the start of the year, Archegos asked for some of that money back, and it was credited, according to people familiar with the matter.
The transfer essentially meant Archegos had even less cash on the line backing up its positions. Some of Credit Suisse’s rivals, meanwhile, moved in the opposite direction. They noticed an increasing risk in the concentration of the firm’s positions and demanded it back up its investments with additional cash, according to executives at the banks.To Read the Full Story
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