Zurich-based Credit Suisse is unwinding a hedge fund client which defaulted on its margin calls last week, it said in a statement on Monday. The end result «could be highly significant and material to our first quarter results,» the bank said.

The Swiss bank didn't name the hedge fund. Several banks are buckling up for a rough ride this week after a number of large block trades were linked to New York-based Archegos Capital last week, according to several media outlets including «Reuters». 

Nomura Discloses Hit

The move by the hedge fund sparked massive drops in the stocks like ViacomCBS and Tencent. Earlier on Monday, Japan's Nomura quantified its claim from a similar hedge fund client, believed to be Archegos, at $2 billion, according to «Bloomberg». A spokesman for UBS didn't comment on whether the bank was also vulnerable to Archegos.

Credit Suisse said in its statement that it would provide an update «in due course». The bank is already grappling with the insolvency of its supply chain partner, Greensill, and a $10.1 billion line of funds the two co-managed – damage that may eclipse its profit its 2.67 billion Swiss franc ($2.77 billion) in net profit last year.

Undermining Healthy Start

The warning comes two weeks after Credit Suisse Thomas Gottstein told investors the bank's strong start into 2021 continued through March. Revenue at its investment banking arm is up more by more than half on the year, thanks to in capital markets issuing and sales and trading, he said. Credit losses remain «benign,» Gottstein noted.

On Monday, Credit Suisse shares plummeted by nearly 13 percent as a result of Archegos. The U.S. hedge fund founded by Bill Hwang. Tiger Asia, a previous company controlled by Hwang, settled insider trading charges in 2012 by paying $44 million.