Morgan Stanley suffers £660m loss from meltdown of hedge fund Archegos Capital last month
Morgan Stanley suffered a £660million loss from the meltdown of hedge fund Archegos Capital last month.
The Wall Street bank took a beating along with several other lenders, including Credit Suisse and Nomura, when Archegos became unable to pay back the money it had borrowed.
Blow: The hit left a blot on Morgan Stanley’s otherwise-healthy first-quarter results
The hit left a blot on Morgan Stanley’s otherwise-healthy first-quarter results, as it posted profits of £3billion – up from £1.2billion a year earlier – driven by strong trading, deal-making and wealth management revenues.
Chief executive James Gorman said: ‘We are never happy taking a loss, but we have to deal with the facts in reality and get it done.’
Archegos, which manages the wealth of billionaire Bill Hwang’s family, got into trouble after a few stocks which the firm had placed big bets on – including US media titans Viacom CBS and Discovery – started to fall in value.
Goldman Sachs, one of Archegos’s prime brokers, acted quickly, meaning it suffered hardly any losses.
Gorman said firms such as Archegos are ‘not bad per se’ and urged regulators not to ‘throw the baby out with the bathwater’.