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JPMorgan says banks could lose $5-10 billion from Archegos collapse: Report

Archegos was forced into a fire sale—selling assets at a very low price— of securities worth around $20 billion last week after some of its portfolio stocks witnessed a significant fall in prices.

March 31, 2021 / 10:48 AM IST
(File Image)

(File Image)

JPMorgan estimates $5-10 billion in bank losses from the collapse of New York-based hedge fund Archegos Capital. The investment bank had earlier pegged the losses in the range of $2 to $5 billion, according to a Bloomberg report.

According to the report, analysts at JPMorgan said Nomura's estimate of potentially losing $2 billion and media speculation of a $3 billion to $4 billion loss at Credit Suisse is "not an unlikely outcome."

"We are still puzzled why Credit Suisse and Nomura have been unable to unwind all their positions at this point," analysts led by Kian Abouhossein said in a note.

Also read: What is Archegos and what does it mean for Indian markets, explained

The losses from the Archegos fallout will be "very material" in relation to lending exposure for a business that is mark-to-market and has liquid collateral, the analysts said as quoted by the business news website.

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The analysts noted that banks could make full disclosures by the end of the week.

Archegos was forced into a fire sale—selling assets at a very low price— of securities worth around $20 billion last week after some of its portfolio stocks witnessed a significant fall in prices.

Archegos is a family office run by Bill Hwang, who was formerly an equity analyst with Tiger Management.

Also read: Archegos crisis | 10 things to know about former Tiger Asia manager Bill Hwang
Moneycontrol News
first published: Mar 31, 2021 10:47 am

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