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UBS and Nomura hit by heavy Archegos losses

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UBS and Nomura became the latest large global banks to reveal scars from the US hedge fund Archegos’ collapse last month.

Swiss bank UBS took a US$774mln charge for losses it incurred when Archegos was forced to liquidate US$20bn of funds overnight though it still managed to post a profit of US$1.82bn in the three months to end-March.

New chief executive Ralph Hamers said the bank was reviewing what had happened and the transparency and liquidity surround the Archegos position.

“The unwinding of highly concentrated positions with many different banks involved leads to a shock effect to the market on those shares. That is what caused most of the losses,” he told reporters.

Hamers added that UBS was also reviewing its family office operation and the risks that are being taken on, but said the bank remained committed to its prime brokerage arm.

“We are committed to the prime brokerage business. The capabilities that underline the business are crucial to continue to build wealth business, so therefore we are committed to it.

“But again, we have to learn and look at the relationships, look at the leverage situation and make sure that the risk management going forward is effective.

Japanese bank Nomura meanwhile posted its biggest-ever quarterly loss after it took a US$2.3bn hit related to the Archegos crisis.

The bank posted a loss of Y155.4bn (US$1.4bn) for the quarter having before the write-down been on track for its best-ever year.

Nomura’s charge for Archegos is so far second only to Credit Suisse, which last week revealed a US$4.8bn provision that the Swiss bank added might rise further.

US bank Morgan Stanley has said it lost US$1bn, though Goldman Sachs and  Deutsche Bank reportedly closed their positions without losses.

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