Credit Suisse, UBS, Nomura, MUFJ and Morgan Stanley Losses for Archegos Family Office Nears $10 Billion
Hong Kong | 28th April 2021
In Q1 2021, Korean-American Bill Hwang’s Archegos family office, which operates like a hedge fund, has caused leading global banks including Credit Suisse, Nomura, Mitsubishi UFJ Financial Group (MUFG) and Morgan Stanley to incur trading losses in their Q1 2021 earning results, with total combined losses nearing $10 billion ($9.84 billion). (AUM ~ Assets under Management)
” Credit Suisse, UBS, Nomura, MUFJ and Morgan Stanley Losses for Archegos Family Office Nears $10 Billion “
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Credit Suisse, UBS, Nomura, MUFG, Morgan Stanley Suffers $9.84 Billion in Losses
For Q1 2021, the total losses from Archegos nears $10 billion ($9.84 billion) with Swiss banks Credit Suisse, reporting a loss of $5.5 billion and raising $1.92 billion in capital and UBS reporting $861 million in losses. Japanese banks Nomura reported a loss of $2.3 billion and MUFG reported a loss of $270 million. American bank Morgan Stanley also reported a $911 million loss in its Q1 2021 earnings.
Reported Losses from Archegos Family Office:
- Credit Suisse: $5.5 billion
- UBS: $861 million
- Nomura: $2.3 billion
- Mitsubishi UFJ Financial Group (MUFG): $270 million
- Morgan Stanley: $911 million
Archegos Family Office – $50 Billion to $100 Billion Stock Positions
Bill Hwang’s family office is Archegos Capital Management, which has around $10 billion of assets and stock positions of $50 billion to $100 billion. The total stock positions held by Archegos Capital Management in numerous banks were estimated to be between $50 billion to $100 billion, leveraged from assets of about $10 billion (5x to 10x leverage). This is one of the largest publicly known margin call in history by a family office, with the unwinding of more than $20 billion of stock positions and $5 – $10 billion of losses incurred by banks and possibly $10 billion of losses by the family office.
With falling share prices, margin calls were made to meet collaterals requirement on Archegos Capital Management in the last weeks of March 2021. More than $20 billion of stock positions were estimated to be unwinded. This sparked a sell-off in companies such as ViacomCBS, Discovery, Baidu, Tencent, GSX Techedu and iQiyi – further driving down collateral values that support the leverage.
Caproasia Institute estimated the total number of family offices in the world to be more than 15,000 in 2020. Billionaires and UHNWs setup family offices, with assets ranging from $300 million to $3 billion, and some with more than $10 billion assets. Newer family offices are also setting up family offices with $20 million to $100 million.
Bill Hwang, ex-Hedge Fund, Insider Trading, $44 million Settlement
Korean-American Bill Hwang was under the tutorage of hedge-fund legend Julian Robertson at hedge fund, Tiger Asia Management and Tiger Asia Partners with around $5 billion AUM (Assets under Management).
In 2012, the hedge fund was shutdown by United States and Hong Kong for insider trading and manipulating Chinese banks stocks. A $44 million settlement by Bill Hwang and the hedge fund was made with the United States Securities and Exchange Commission (SEC), and Bill Hwang was barred from the investment advisory industry.
Thereafter, Bill Hwang setup his family office, Archegos Capital Management.