Nomura and Credit Suisse warned on Monday they were facing big losses after a U.S. hedge fund, named by sources as Archegos Capital Management, defaulted on margin calls, putting investors on edge about who else had been caught out.
Losses at Archegos Capital, run by former Tiger Asia manager Bill Hwang, had triggered a fire sale of stocks on Friday, a source familiar with the matter said.
Nomura said it faced a possible $2 billion loss due to transactions with a U.S. client while Credit Suisse said a default on margin calls by a U.S.-based fund could be “highly significant and material” to its first-quarter results.
Credit Suisse said that a fund had “defaulted on margin calls” to it and other banks, meaning they were now in the process of exiting these positions.
Bank stocks slide
Nomura shares slid 16.3%, a record one-day drop, while Credit Suisse was down 14%, its biggest fall in a year.
Deutsche Bank was down 5% while UBS was 3.8% lower. UBS had no immediate comment on its exposure to Archegos.
Deutsche’s Archegos exposure was a fraction of what others have, a source familiar with the matter said, adding that the bank had not incurred any losses and was in the process of managing its position.