Morgan Stanley performs well despite nearly $ 1 billion in Archegos-related losses
Infotech

Morgan Stanley performs well despite nearly $ 1 billion in Archegos-related losses

Posted on Apr 16, 2021, 7:01 PM

In the Archegos fund debacle, Morgan Stanley fared better than others… but the American giant still left some feathers. The US bank on Friday announced a loss of nearly $ 1 billion linked to the fall of the hedge fund that had defaulted on margin calls. Its quarterly profit, however, continues to rise sharply.

http://vasutioc.com

Morgan Stanley is one of six banks exposed to the woes of the Archegos investment fund. When unwinding its positions, it initially lost $ 644 million, before deciding to unwind its remaining positions, which resulted in another loss of $ 267 million, said Morgan Stanley chief executive James Gorman. , during a conference call with analysts. “I consider this decision necessary and the money well spent”, he added.

With these $ 911 billion in woes, Morgan Stanley is doing relatively well compared to others. Among its rivals, those who were slow to shake off their positions paid a heavy price. The institutions most affected by the collapse of Bill Hwang’s fund remain Credit Suisse, with $ 4.7 billion in losses, and the Japanese bank Nomura, with $ 2 billion. Goldman Sachs, for its part, escaped virtually unscathed, citing only a “negligible” impact on its accounts. If the massive sales of securities linked to Archegos have not had a systemic consequence so far, this new case is attracting the attention of regulators.

The US bank’s net profit reached $ 3.98 billion. Net banking income, for its part, jumped 61% compared to the first quarter of 2020, reaching $ 15.72 billion. Income from wealth management and investment banking grew by 47% and 90% respectively in one year. Like its counterpart Goldman Sachs, Morgan Stanley has benefited in particular from the rebound in the stock markets and investor enthusiasm for SPACs.

Leave a Reply

Your email address will not be published. Required fields are marked *