UBS loses $774m following Archegos collapse

Swiss investment bank UBS has announced loss in operating income of $774 million following the collapse of Archegos Capital Management.

It has been reported that the bank expects a further $87 million loss in the second quarter, also connected to the implosion of the family office.

Earlier this month, Credit Suisse announced a $4.7 billion loss related to the company’s collapse.

UBS chief executive Ralph Hamers said that while the bank had seen record activity across its client franchises, including pre-tax profit growth of 14 per cent to $1.8 billion, the financial results had to factor in a significant loss due to the implosion of Bill Hwang’s capital management firm.

The bank said that global markets revenue had decreased by 27 per cent, or $554 million, driven by the loss. It pointed out that without Archegos’ default, global markets would have been up 11 per cent.

Commenting on the impact of the Archegos collapse, Hamers said: “We are all clearly disappointed and are taking this very seriously. A detailed review of our relevant risk management processes is underway and appropriate measures are being put in place to avoid such situations in the future. This never impeded our ability to serve our clients.”

While the investment bank fully absorbed the loss, it still managed to deliver a 13 per cent return on attributed equity.

But the chief exec pointed out that this would have been in excess of 30 per cent if it had not been for the incident.

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