Nomura, UBS Take Global Banks’ Archegos Hit to Over $10 Billion

Global banks’ losses related to the collapse of Archegos Capital, has topped $10 billion.

Marion Halftermeyer

27 Apr 2021, 06:52 PM IST

Nomura, UBS Take Global Banks’ Archegos Hit to Over $10 Billion

An office worker walks past a UBS Group AG office building in Zurich. (Photographer: Stefan Wermuth/Bloomberg)

(Bloomberg) -- Global banks’ losses related to the collapse of Bill Hwang’s Archegos Capital Management topped $10 billion after Nomura Holdings Inc. and UBS Group AG disclosed more than $3.7 billion of combined hits from the collapse of the U.S. family office.

The Japanese bank booked about 245.7 billion yen ($2.3 billion) of losses in the three months ended March 31, driving the bank to its biggest quarterly loss since 2009, and will take another hit of about 62 billion yen this fiscal year. UBS Group AG, which hadn’t previously signaled any Archegos impact, said it sees a combined hit of about $861 million through the second quarter.

The two banks are among the biggest losers from the debacle at Archegos, which collapsed when the firm built up highly leveraged positions on stocks and was unable to meet banks’ margin calls. Nomura is the second-most impacted lender after Credit Suisse Group AG reported a combined loss of about $5.5 billion. UBS lies in fourth position, just behind Morgan Stanley, which also surprised investors and analysts with a $911 million hit earlier this month.

Deutsche Bank, which reports earnings on Wednesday, JPMorgan Chase & Co., and Citigroup Inc. were among lenders that all managed to limit losses or escape them. Both Morgan Stanley and UBS decided that their losses were not significant enough to warrant an announcement ahead of scheduled earnings announcements.

Goldman Sachs and Wells Fargo managed to entirely avoid losses on their exposures, while Deutsche Bank said in late March that it was managing down immaterial remaining client positions and didn’t expect to incur any losses.

The disaster with Archegos has led regulators, lawmakers and consumer advocates to push to expose the inner workings of family offices, which are closely held and lightly regulated, yet manage an estimated $6 trillion for the ultra-rich globally. U.S. regulators are considering tougher disclosure requirements in the wake of Archegos. Securities and Exchange Commissioners are exploring how to increase transparency for the types of derivative bets that sank the firm, Bloomberg has reported.