ILUSTRASI. FILE PHOTO: A trader at the New York Stock Exchange works as markets continue to react to the coronavirus disease (COVID-19) inside of the NYSE in New York, U.S., March 18, 2020. REUTERS/Lucas Jackson/File Photo
Reporter: Dina Mirayanti Hutauruk | Editor: I knew Laoli
KONTAN.CO.ID – JAKARTA. The total losses for global banks due to the collapse of Archegos Capital were much larger than previously estimated. According to JPMorgan’s calculations, the losses that have to be borne by the banks associated with the US investment company are in the range of US $ 5 billion-US $ 10 billion or the equivalent of Rp 72.5 trillion – Rp 145 trillion.
Previously, JPMorgan estimated that the potential losses of these global banks would be in the range of US $ 2 billion to US $ 5 billion.
The collapse of Archegos Capital occurred after the company failed to fulfill its obligation to settle margin transactions. The asset management company is said to hold a position of US $ 50 billion even though it only has assets of US $ 10 billion. The remaining US $ 40 billion is usually obtained through loans.
A number of analysts led by Kian Abouhossein in their research said that the losses from trading cancellations related to Archegos will be very material in relation to loan exposure for market-to-market businesses and have liquid guarantees.
Also Read: This amount is the prediction of losses borne by banks due to the Archegos transaction
They said there were indications that Nomura Holdings Inc’s potential loss could reach US $ 2 billion. Meanwhile, media speculation that estimates Credit Suisse AG’s losses are around US $ 3 billion to US $ 4 billion is not impossible in their opinion.
Analysts and investors alike are trying to figure out the final losses of the banks hit by the Archegos explosion. “We are still confused as to why Credit Suisse and Nomura are unable to release all their positions at this point,” wrote analysts as quoted by Bloomberg, Wednesday (31/3).
Analysts expect a number of banks to reveal the details of their respective losses at the end of this week. Analysts also advise investors to keep an eye on statements from credit institutions because their estimates of poor risk management could also be an issue.
Meanwhile, Credit Suisse executives estimate the losses incurred related to Archego in the billions of dollars, according to Bloomberg sources. The stock market boom in March could wipe out more than a year of gain for the bank and threaten its share buyback plan, adding to the reputation hit from another misstep.
Also Read: Wall Street weakened, investors rotating portfolios towards the end of the quarter
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Reporter: Dina Mirayanti Hutauruk
Editor: did you know Laoli
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