The collapse of Archegos, the American hedge fund that went into liquidation at the end of March, sinks the accounts of Nomura. The Japanese financial giant – one of the most exposed to bets of a certain Bill Hwang – File the 2020-2021 fiscal year with a net loss of $2,3 billion. Not only that: the Bank said to expect a hole of another 570 million for the current yearagain due to the bankrupt hedge fund.
Nomura specified that he had liquidated 97% of the positions linked to Archegos (which in the note is modestly referred to as "an American client"). In the fourth quarter of 2020-21 alone, the Japanese group lost $1,4 billion and revenues fell by 28%, to $1,5 billion.
Different story, at least in terms of accounts, however ubs. The Swiss giant suffered due to Archegos a loss of $774 million, but still managed to close the first quarter of the year with a profit of 1,8 billion dollars. The figure is 14% higher than that recorded in the same period last year and exceeds the expectations of analysts, who on average expected profits of 1,6 billion dollars.
Budgets, however, are not everything. In terms of reputation, the Archegos scandal will weigh on all the financial giants involved for years, including those capable of taking the blow without too many financial problems. The bankruptcy of the American hedge fund, in fact, it casts a shadow on the criteria with which the big banks select funds to invest in e undermines the climate of trust of the market.
In summary, Archegos had taken very risky financial positions, going through various intermediaries who had provided him with ample credit for his operations. Some of Hwang's financial bets turned out to be wrong and, in the face of falling stocks, the banks triggered "margin calls", i.e. requests for coverage, which Hwang was unable to meet. Banks then sold en masse the shares they had acquired, increasing the downward pressure on stocks. The equivalent value of the securities dumped on the markets has been estimated at 33 billion dollars.
Overall, the bank most affected by the crash was the Credit Suisse, which last week announced a charge of 4 billion euros to cover the damage caused by Archegos, which also brought the first quarter accounts into the red.
