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Nomura Holdings and Credit Suisse Group could suffer “serious damage” due to a large-scale reversal of equity positions in Arquegos Capital Management. The share prices of both companies plummeted in trading on the 29th.
The bank, which was lending money to Arquegos, a family office run by Bill Juan, is quick to contain the shock after Arquegos was unable to answer the margin call last week. With the forced cancellation of positions of more than $ 20 billion (about 2.2 trillion yen) related to maple trees, the prices of stocks such as Baidu and Viacom CBS fluctuated significantly, and the major financial institutions on Wall Street attention focused on the opaque world of leveraged operations the institutions are facilitating.
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The impact of the Arquegos issuance on financial markets as a whole has been limited so far, but banks and people familiar with the situation have suggested that the company’s related positions have not yet been closed. Credit Suisse said yesterday that banks, including the bank, are still in the process of exiting their positions, without naming Arquegos. Morgan Stanley planned to sell its shares in ViacomCBS on the 28th, a person familiar with the matter said.
Arquegos’ development has caught the attention of the financial industry, which has been leveraging itself over the years amid low interest rates and bullish equity prices.
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Many of Juan’s deals are still unknown, but market participants estimate that his net worth is between $ 5 billion and $ 10 billion and the total position could exceed $ 50 billion.
Most of the leverage was provided by banks through swaps, according to people familiar with the transaction. Since the position is on the bank’s balance sheet, Arquegos did not have to report its holdings to regulators.
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Nomura’s share price fell 16% on the 29th, the biggest drop in history. The company did not reveal the name of the other party, claiming it would charge an American customer about $ 2 billion, but the customer is Alkegos, a person familiar with the matter said.
Credit Suisse explained that, while it is too early to determine the amount of the loss, it could have “a very significant and significant impact on the January-March (first quarter) results.”
Credit Suisse shares temporarily fell 17% on 29 ET. The closing price was CHF 10.75, down 14%.
Goldman Sachs Group told shareholders and clients that Arquegos’ reversal of operations is likely to have less of an impact on earnings.I am telling you. A person familiar with the situation revealed.
Goldman’s loan to Arquegos was well secured and the company was one of the first financial institutions to reduce its exposure, according to people familiar with the matter, who said it was private information. Most of the positions related to Arquegos are already closed. The Goldman media representative declined to comment.
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Morgan Stanley is also a leading Arquegos broker that put together a block trade that surprised the market on the 26th, according to people familiar with the matter. The UBS Group also had a deal with Arquegos. It is unknown if each row faces a loss. Morgan Stanley and UBS declined to comment.
Original title:Credit Suisse, Nomura Slump as Banks Tally Archegos Damage (3) （抜 粋）
(Add the closing price of the share price to the ninth paragraph and update the information in the last paragraph.In the previous article, Nomura’s invoice was corrected to around $ 2 billion.)
