UBS Joins Morgan Stanley With Surprise $861 Million Archegos Hit
Marion Halftermeyer, 27 April 2021
UBS Group AG disclosed an $861 million hit from the implosion of Archegos Capital Management and vowed to improve risk management, joining Morgan Stanley in blindsiding investors who’d been kept in the dark for weeks about the size of the losses.
The loss, mostly booked in the first quarter, overshadowed a better-than-expected profit, with strong performance in the key wealth management business. Chief Executive Officer Ralph Hamers said while the bank will require more transparency from clients to prevent such losses in the future, he defended the business with hedge funds as “strategic” and said he had no plans to follow rival Credit Suisse Group AG in cutting back lending.
“Clearly, we are very disappointed at this situation,” he said in an interview with Bloomberg TV. “We are reviewing the different prime brokerage relationships, as well as the GFO — the family office relationships.” Continue reading “Article: UBS Joins Morgan Stanley With Surprise $861 Million Archegos Hit”
Unlike the devastating London Whale debacle in 2012, which was all JPMorgan eventually drawn and quartered quite theatrically before Congress (and was a clear explanation of how banks used Fed reserves to manipulate markets, something most market participants had no idea was possible), this time JPMorgan was nowhere to be found in the aftermath of the historic margin call that destroyed hedge fund Archegos. Which is may explain why JPMorgan bank analyst Kian Abouhossein admits he is quite “puzzled” by the recent fallout from the Archegos implosion (or maybe JPM simply was not a Prime Broker of the notorious Tiger cub), which however does not prevent him from trying to calculate the capital at risk from the Archegos collapse. 