UBS Group AG said it lost $774 million from the implosion last month of Archegos Capital Management, a bigger hit than analysts expected, deepening the damage caused by the fund.
Switzerland’s biggest bank by assets said it lost the money from closing out a U.S. fund’s trades. It took $434 million off net profit in the quarter, which overall was up 14% at $1.82 billion because of a surge in investment banking revenue from strong stock markets. UBS said it has fully exited the fund’s positions now and the additional losses in the second quarter are immaterial.
UBS Chief Executive Ralph Hamers, in the job since November, said the bank is taking the incident very seriously, is disappointed and is reviewing its risk management systems to avoid such situations. He said it hadn’t stopped UBS from improving its capital position in the quarter and that the investment bank was able to bear the loss.
Archegos, the family office of Bill Hwang, wreaked havoc across Wall Street when it couldn’t meet margin calls in March. Credit Suisse lost $5.5 billion, Nomura lost around $2 billion, Morgan Stanley lost $911 million and other banks have also reported losses. UBS was one of about a half-dozen banks that lent to Archegos to take large, concentrated positions in stocks. Some of the positions reversed course in March and banks lost money selling the shares.
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