Reuters, 16 April 2021
Morgan Stanley lost nearly $1 billion from the collapse of family office Archegos Capital Management, the bank said Friday, muddying its 150 percent jump in first-quarter profit that was powered by a boom in trading and deal-making.
Morgan Stanley was one of several banks that had exposure to Archegos, which defaulted on margin calls late last month and triggered a fire sale of stocks across Wall Street.
Morgan Stanley lost $644 million by selling stocks it held related to Archegos’ positions, and another $267 million trying to “derisk” them, Morgan Stanley Chief Executive James Gorman said on a call with analysts.
“I regard that decision as necessary and money well spent,” he said.
The bank did not disclose losses right away because they were not deemed material in the context of its overall results, he added.
Morgan Stanley is not alone in nursing losses as a prime broker for Archegos. Switzerland’s Credit Suisse and Japan’s Nomura bore the brunt, having lost $4.7 billion and $2 billion, respectively.