Credit Suisse Loses $60 Million on Canada Goose

(Bloomberg) -- Credit Suisse Group AG lost about $60 million late last year after it was left holding shares in the luxury parka maker that slumped during tensions between Canada and China, according to people with knowledge of the matter.

Credit Suisse acted as an underwriter on the sale of 10 million shares by Canada Goose Holdings Inc. stockholders in late November. It then saw the value of the stock tumble after the arrest of Huawei Technologies Co.’s finance chief in Vancouver prompted a diplomatic dispute between Canada and China -- a key market for the apparel maker’s growth.

The offering was priced at $65.15 a share, a 1.85 percent discount to the previous close, a person familiar with the matter said at the time of the deal in late November. The arrest of Meng Wanzhou on Dec. 1 prompted Chinese websites to call for a boycott of Canadian brands, and prompted a 20 percent, four-day losing streak for Canada Goose stock later that month.

The bank eventually sold the Canada Goose shares it held at a loss, the people said, requesting anonymity as the matter hasn’t been made public. Canadian Imperial Bank of Commerce was the other underwriter of the share sale.

Credit Suisse declined to comment on the details of the trade, but said that its full-year guidance for 2018 pretax profit of between 3.2 billion francs ($3.2 billion) and 3.4 billion francs remains unchanged. At the bank’s investor day in mid-December, executives indicated that Global Markets would lose money in the fourth quarter, following on a surprise loss in the third quarter.

Read More: Canada Goose Opens Beijing Store That Was Delayed Amid Tensions

The trade exacerbates woes at Credit Suisse’s investment banking businesses, which the firm has scaled down to focus on wealth management. The lender, led by Tidjane Thiam, just completed a sweeping three-year restructuring program and is now trying to convince investors to stick with the bank by pledging capital returns and growth in profits.

--With assistance from Sandrine Rastello and Ross Larsen.

To contact the reporter on this story: Jan-Henrik Förster in Zurich at jforster20@bloomberg.net

To contact the editors responsible for this story: Dale Crofts at dcrofts@bloomberg.net, Keith Campbell

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