Weekly Global News Wrap: Credit Suisse takes $2.7b hit from Archegos; Deutsche to advise Italy's Carige sale
And US FTC shuts down mobile savings app Beam.
Credit Suisse has announced an estimated $4.7b (CHF4.4b) charge from its relationship with embattled Archegos Capital Management, as well as an overhaul of its investment bank and risk division.
The bank now expects a Q1 loss of around $960m (CHF900m). It is also suspending its share buyback plans and cutting its dividend by two thirds. Its chief risk officer Lara Warner and investment banking head Brian Chin are also stepping down.
The Archegos fallout is the second major scandal for Credit Suisse in just over a month after the collapse of Greensill Capital, with the bank’s shares down by a quarter since 1 March.
Italy’s interbank fund has hired Deutsche Bank as financial adviser to manage the sale of Banca Carige, after Cassa Centrale Banca (CCB) backed out of the purchase on profitability outlook concerns amidst the pandemic.
The banking fund, dubbed FITD, owns 80% of Carige after it rescued the troubled lender in 2019, injecting about $706m (EUR600m). As part of the bailout, CCB bought an 8.3% stake with an option to buy FITD’s remaining holding by the end of 2021.
In March, CCB decided to not exercise the option, leaving the stake with the banking fund.
The US Federal Trade Commission (FTC) has shut down mobile savings app Beam as part of a tentative settlement, as well as refund approximately $2.6m in customer deposits and interest.
The agreement, which must still be approved by a federal judge in San Francisco, bars the company’s founder Yinan “Aaron” Du from operating a similar business in the future. Launching in 2019, Beam purported to pay customers with much higher interests on deposits, with users allowed to hike their daily rate to as high as 7% through tasks such as referrals.
A CNBC probe revealed that Beam used a legal arrangement known as a sweep account to move customer deposits through a network of banks, collecting interest on those funds that it could then pay back to depositors.