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05 May, 2021 16:01

Archegos prepares for insolvency prompted by bank claims - report

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Archegos Capital is preparing for insolvency prompted by banks' attempts to recover some of the $10bn (£7.2bn) they lost on its botched bets, the Financial Times reported.

The family office has hired advisers to examine potential legal claims from banks and plan for a potential winding down of its business, the FT said.

Credit Suisse, Nomura, Morgan Stanley, UBS, MUFG and Mizuho lost more than $10bn as prime brokers to Archegos in March. The banks were forced to liquidate its positions in US companies such as ViacomCBS because it failed to meet margin calls.

Several of the banks are preparing to send Archegos "letters of demand" requesting payment before a legal claim, the FT said. Before doing so they want to finish closing Archegos's positions. Banks are also investigating whether the family office run by Bill Hwang withheld or provided incorrect information about its borrowing from other prime brokers, the FT said.

A person close to the situation told the FT: “There is a question mark over how much the banks are entitled to claim and whether the fund has any recourse for the way the banks behaved when they dumped the stocks. It will come down to what indemnity was in the loan and swap agreements … The banks are all going to claim as much as they possibly can.”

The episode has led to recriminations within banks and investigations by regulators over the amount of leverage offered to Archegos. Credit Suisse has parted company with several senior officials as well as managers and traders over its losses from Archegos and Greensill.


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Pilling and Co Stockbrokers Ltd. is not responsible for the content or accuracy of third party news articles and we may not share the views of the author or publisher.

We provide third party news for your convenience and information only and make no representation or endorsement whatsoever and hereby exclude all liability for any loss or damage that may be incurred by you as a result of your access or use. Please note that third party content may be subject to terms and conditions imposed by the third party owner of that content.