European banking shares drop after Credit Suisse and Nomura reveal losses linked to US hedge fund stock firesale
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Banks were among the worst performing sectors of the stock market in Europe on Monday, after Credit Suisse said it had racked up undisclosed losses relating to a US hedge fund’s mass-liquidation of stocks on Friday that has rattled investors around the globe.
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Japanese bank Nomura also said it faced “significant loss” of potentially $2 billion due to transactions with an unnamed US client, stripping 16% off its shares by the close of business on Monday.
Shares in Credit Suisse, one of the largest banks in Europe, fell to their lowest since November, and were last down 13.7% at 10.76 Swiss francs in Zurich ($11.46), set for their biggest one-day loss since last March.
This was the result of a US hedge fund missing payment on margin commitments and Credit Suisse said it was “in the process of exiting these positions”.
European banks fell across the board on Monday. Deutsche Bank tumbled by as much as 5%, while UBS fell by as much as 4%. Barclays and BNP Paribas fell around 2% and many other stock prices showing smaller declines. US firms Goldman Sachs and Morgan Stanley lost around 3% each in US premarket trading.
The pan-European STOXX 600 index was last up around 0.3% on the day, with gains in the travel, energy and retail sectors being offset by losses among the banks and other financial-services providers.
Archegos Capital, a hedge fund headed up by Korean billionaire Bill Hwang, was forced to sell off around $35 billion in shares in US entertainment giants Viacom and Discovery and various New York-listed Chinese tech stocks. US stock index futures pointed to a lower open later in the day.