Ideally, you’d hire a person to keep an eye on the risks your counterparties are taking before one of them costs you $5.5 billion, many legal bills, a great deal of talent, maybe an antitrust prosecution and the ire of the Swiss people. Of course, no one does this, and anyway Credit Suisse was spending that money keeping an eye on its own employees rather than on the likes of Archegos Capital Management which, it admits in retrospect, was a poor allocation of resources for a lot of reasons.
In reality, of course, you only hire such a person after the thing that person would have stopped has already happened, cost you $5.5 billion, etc.
The new function, called counterparty market risk, will be headed by Amélie Perrier…. Perrier will focus on improving how Credit Suisse measures risk for counterparties, according to the memo. This means keeping track of dangers building up in the investment positions of clients that could spring back on the bank…. The appointment of the new position is an acknowledgment that part of the Archegos failure stemmed not just from the investment firm failing to meet its obligations from a credit risk perspective, but because Credit Suisse failed to adequately protect itself from the underlying positions Archegos held.
For more of the latest in litigation, regulation, deals and financial services trends, sign up for Finance Docket, a partnership between Breaking Media publications Above the Law and Dealbreaker.