Swiss investment banking giant Credit Suisse has shocked the world of finance, making sweeping changes to its management and cutting bonuses across the company.
Two key executives are to be replaced later this month, as the bank reacts to the fallout of two of its most important business relationships falling apart in recent weeks.
Chief risk officer, Lara Warner and investment banking chief, Brian Chin will both leave the bank in April, after associates Greensill Capital and hedge fund Archegos recently folded and made major losses.
Here is everything you need to know about it.
In early March, Australian lender Greensill Capital, which counts former British prime minister David Cameron among its advisers, filed for administration.
The lender had “fallen into severe financial distress,” according to its lawyers and had no way of repaying a 140 US dollar (£101 million) loan to Credit Suisse, the Financial Times reported.
Greensill lends money to businesses so they can pay their suppliers. One of its major customers is Sanjeev Gupta’s GFG Alliance, which owns Liberty Steel, which in turn employs 3,000 people in the UK.
A few weeks later, Archegos Capital Management faced a similar demise, after the firm defaulted on margin calls from several global investment banks, including Credit Suisse.
The company collapsed after bets it had made on stocks unravelled, including those in US entertainment giant Viacom, which fell and forced Archegos to liquidate almost £14 billion worth of its assets.
Archegos was run by Korean-born New York-based Bill Hwang, a controversial Wall Street investor who had built up large positions in companies worth billions of pounds, despite a previous insider trading conviction.
What does it all mean for Credit Suisse?
In a statement, Thomas Gottstein, Credit Suisse's chief executive, called the “significant loss” in Credit Suisse’s prime services business relating to the failure of the US-based hedge fund “unacceptable.”
"In combination with the recent issues around the supply chain finance funds,” he added, “I recognise that these cases have caused significant concern amongst all our stakeholders."
Credit Suisse is expecting losses of $4.7 billion (£3.4 billion) from the Archegos' situation alone.
The bank is yet to calculate what might be lost from Greensill, but it has said it is expecting to make a $960 million (£690 million) loss for the first financial quarter of 2021.
The Zürich-based bank has also announced that its board will not be receiving bonuses for the financial year to 1 April, and it has also cut the price of its shares from 0.29 (£0.22) to 0.10 (£0.08) Swiss francs per share, a reduction of two-thirds.
It has also delayed a shareholder vote to confirm its board of directors.
Who are the executives on the way out?
Investment banking chief Brian Chin has been a Member of the Executive Board of Credit Suisse since 2016, having first joined the bank in 2003.
According to eFinancialCareers.co.uk, rather than an accountant, Chin is a “securitisation guy” (the financial practice of pooling various types of contractual debt such as residential mortgages or credit card debt obligations and selling their related cash flows to third party investors).
“He was global head of securitised products at Credit Suisse between 2012 and 2016 and a former head of agency trading in the securitised products group,” which gives him “a power base in Credit Suisse's historically strong securitisation division.”
Lara Warner – chief risk officer – has been a Member of the Executive Board of Credit Suisse since 2015, having served with the firm in some capacity since 2002, and previously working for Lehman Brothers and AT&T.