Investment banks Credit Suisse and Nomura said they would incur significant losses after the U.S.-based hedge fund was forced into a fire sale of assets and defaulted on its margin calls.
“The estimated amount of the claim against the client is approximately $2 billion,” Nomura
indicated in a statement.
said the sell off “could be highly significant and material to our first-quarter results.”
- Major banks including Goldman Sachs and Morgan Stanley last week unloaded some $30 billion worth of shares in U.S. media and Chinese technology companies linked to Tiger Asia manager Bill Hwang’s Archegos Capital Management.
- Nomura shares sank 16% in Tokyo on Monday and Credit Suisse was down 14% in midday trading in Europe.
The outlook: Other block selloffs of Archegos-related shares are expected but overall the fund’s borrowing “seems to predate recent central bank accommodation, and “the economic impact of this is likely to be very limited,” according to UBS chief economist Paul Donovan.