Credit Suisse warns of 'significant' losses from exiting hedge fund positions

© Reuters. FILE PHOTO: Logo of Swiss bank Credit Suisse is seen in Zurich

ZURICH (Reuters) – Credit Suisse (SIX:)’s first quarter results could suffer a material impact after the bank started exiting positions after a U.S.-based hedge fund defaulted on margin calls it made, the bank said on Monday.

“While at this time it is premature to quantify the exact size of the loss resulting from this exit, it could be highly significant and material to our first quarter results,” the bank said.

Switzerland’s second biggest lender said the un-named hedge fund defaulted on margin calls made last week by Credit Suisse and other banks. A margin call is a demand from a broker to add more money to an account to cover potential losses.

Following the failure of the fund to meet these margin commitments, Credit Suisse and a number of other banks are in the process of exiting these positions, Credit Suisse said.

Credit Suisse said it would provide an update on the matter in “due course.”

The warning is a further blow to the bank which is considering compensating investors hit by the collapse of funds linked to insolvent finance firm Greensill.

The Swiss lender this month closed around $10 billion of supply-chain finance funds that bought notes from Greensill. Of this, $3.1 billion has so far been repaid and more than $1.2 billion in cash remains in the funds, leaving more than $5 billion outstanding.

Disclaimer: Fusion Media would like to remind you that the data contained in this website is not necessarily real-time nor accurate. All CFDs (stocks, indexes, futures) and Forex prices are not provided by exchanges but rather by market makers, and so prices may not be accurate and may differ from the actual market price, meaning prices are indicative and not appropriate for trading purposes. Therefore Fusion Media doesn`t bear any responsibility for any trading losses you might incur as a result of using this data.

READ  Italy plans to widen special powers over strategic sectors

Fusion Media or anyone involved with Fusion Media will not accept any liability for loss or damage as a result of reliance on the information including data, quotes, charts and buy/sell signals contained within this website. Please be fully informed regarding the risks and costs associated with trading the financial markets, it is one of the riskiest investment forms possible.



Please enter your comment!
Please enter your name here