New Delhi, Apr 6 (IANS): Credit Suisse has taken a hit of around $4.7 billion because of the default by a major US-based hedge fund on margin calls.

"While our financial results are still subject to detailed finalisation and review, we would expect to report a pre-tax loss for 1Q 2021 of approximately (Swiss Franc) CHF 900 million. This includes a charge of CHF 4.4 billion (around $4.7 billion) in respect of the failure by a US-based hedge fund to meet its margin commitments as we announced on March 29, 2021," Credit Suisse said in a statement, although it did not name the fund house.

Media reports suggested that Archegos Capital Management defaulted on the margin calls.

The bank added that this will negate the very strong performance that had otherwise been achieved by its investment banking businesses and the increase in the year-on-year profits in all three of its wealth management businesses, as well as in asset management, with particular strength in its Asia Pacific division.

"Net new assets were positive during the quarter across our three wealth management businesses as well as in asset management and in the Swiss corporate and institutional business," the statement said.

It further said: "With regard to the four supply chain finance funds, where we continue to see cash inflows, we will distribute a separate update on further repayments within the next few days."

It acknowledged that both the US hedge fund and the supply chain finance fund matters require substantial further review and scrutiny.

The Board of Directors of the company has launched investigations into both of these matters which will not only focus on the direct issues arising from each of them, but also reflect on the broader consequences and lessons learned.

It has also undertaken senior management changes within the investment bank division and within the risk and compliance organisation.

In another statement, Credit Suisse said that Brian Chin, the CEO of the Investment Bank, and Lara Warner, the Chief Risk and Compliance Officer, will step down from their roles.

Thomas Gottstein, CEO of Credit Suisse Group said: "The significant loss in our Prime Services business relating to the failure of a US-based hedge fund is unacceptable. In combination with the recent issues around the supply chain finance funds, I recognise that these cases have caused significant concern amongst all our stakeholders.

"Together with the Board of Directors, we are fully committed to addressing these situations. Serious lessons will be learned. Credit Suisse remains a formidable institution with a rich history," the CEO said.

Its financial results for Q1 2021 will be published on April 22.