In the case of the ailing family office, some banks had sold large blocks of shares from the collateral last Friday. Deutsche Bank was probably one of them.
ALike Goldman Sachs and Morgan Stanley, Deutsche Bank also sold a large block of shares last Friday in the case of the troubled Archegos family office. This is reported by the Bloomberg news agency, which puts the volume at around $ 4 billion. Archegos had not been able to meet the demands of financing banks for derivatives speculations. One of the largest hedge fund companies in Europe, Marshall Wace, is said to be among the buyers of Deutsche Bank’s stake. Spokesmen for Deutsche Bank and Marshall Wace had declined to comment.
Including the sale by Deutsche Bank, investment banks would have liquidated nearly $ 30 billion in holdings in the wake of Archegos’ collapse. As reported, the emergency sales were preceded by an attempt by Credit Suisse to negotiate a standstill agreement among the banks in order to enable an orderly reduction in stocks, but this failed. Deutsche Bank had said even before its sales became known that it would not face any losses from the deal.
Credit Suisse and the Japanese Nomura expect losses in the billions of dollars. JP Morgan analysts estimate that the Archegos collapse could result in total bank losses of up to $ 10 billion.
In the financial markets, one is wondering, on the one hand, why the banks were able to grant Archegos founder Bill Hwang, who was involved in an insider scandal in 2012, such extensive loans and whether this was all just the tip of an iceberg.
Surprise at some risk management
It is also surprising, however, that some banks apparently got away with it intact because they were able to liquidate or possibly still hold extensive collateral packages, but others were apparently unable to do so, but instead had to issue high-level loss warnings. This casts a shadow on the risk management of the affected houses.
For Nomura in particular, good business in North America had been of great importance in the past few months. Japanese financial houses, which are not subject to the same regulations in Europe and America, which were significantly stricter after the global financial crisis in 2008/09, are currently popular with foreign hedge funds as financiers.
As far as Credit Suisse is concerned, the Greensill affair did not shed a good light on the company’s risk management.