{"id":228957,"date":"2021-04-16T23:06:21","date_gmt":"2021-04-16T20:06:21","guid":{"rendered":"https:\/\/en.buradabiliyorum.com\/morgan-stanley-reveals-nearly-1b-loss-from-archegos-implosion\/"},"modified":"2021-04-16T23:06:21","modified_gmt":"2021-04-16T20:06:21","slug":"morgan-stanley-reveals-nearly-1b-loss-from-archegos-implosion","status":"publish","type":"post","link":"https:\/\/buradabiliyorum.com\/en\/morgan-stanley-reveals-nearly-1b-loss-from-archegos-implosion\/","title":{"rendered":"#Morgan Stanley reveals nearly $1B loss from Archegos implosion"},"content":{"rendered":"

“#Morgan Stanley reveals nearly $1B loss from Archegos implosion<\/strong>”<\/p>\n

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Morgan\u00a0Stanley\u00a0lost nearly $1 billion from the collapse of family office Archegos Capital Management, the bank said Friday, muddying its 150 percent jump in first-quarter profit that was powered by a boom in trading and deal-making.<\/p>\n

Morgan\u00a0Stanley\u00a0was one of several banks that had exposure to Archegos, which defaulted on margin calls late last month and triggered a fire sale of stocks across Wall Street.<\/p>\n

Morgan\u00a0Stanley\u00a0lost $644 million by selling stocks it held related to Archegos\u2019 positions, and another $267 million trying to \u201cderisk\u201d them,\u00a0Morgan\u00a0Stanley\u00a0Chief Executive James Gorman said on a call with analysts.<\/p>\n

\u201cI regard that decision as necessary and money well spent,\u201d he said.<\/p>\n

The bank did not disclose losses right away because they were not deemed material in the context of its overall results, he added.<\/p>\n

Morgan\u00a0Stanley\u00a0is not alone in nursing losses as a prime broker for Archegos. Switzerland\u2019s Credit Suisse and Japan\u2019s Nomura bore the brunt, having lost $4.7 billion and $2 billion, respectively.<\/p>\n

\"Bill
Bill Hwang, head of Archegos Capital Management, the collapse of which cost Morgan Stanley close to $1 billion.<\/figcaption>
Bloomberg via Getty Images<\/span><\/figcaption><\/figure>\n

Goldman Sachs, Deutsche Bank and Wells Fargo also handled Archegos positions but exited them without losses, Reuters and other media<\/a> outlets have reported.<\/p>\n

Morgan\u00a0Stanley\u00a0did not realize that Archegos had similar, concentrated positions at several banks across Wall Street, Chief Financial Officer Jonathan Pruzan told Reuters. As such, the collateral requirements it imposed were only reflecting Archegos\u2019s particular risks at\u00a0Morgan\u00a0Stanley, not the risks across the fund\u2019s broader portfolio.<\/p>\n

Morgan\u00a0Stanley\u00a0has reviewed its prime brokerage business for similar problems but not found any, Pruzan said. The bank is looking more broadly at its method for stress testing, and will recalibrate positions with clients as necessary.<\/p>\n

\u201cWe are never happ<\/a>y when we take a loss,\u201d he said. \u201cBut the event is over\u2026and we will learn from the experience.\u201d<\/p>\n

The Archegos saga is likely to have regulatory repercussions, however, with a slew of U.S. watchdogs as well as the Senate Banking Committee all probing the incident to better understand why some banks were so exposed to a single client.<\/p>\n

Gorman appeared exasperated at times during the call as he faced repeated questions from analysts about Archegos, distracting from the bank\u2019s otherwise stellar performance.<\/p>\n

Morgan\u00a0Stanley\u2019s shares were down 1 percent.<\/p>\n

\u201cIt\u2019s not a financial event in the grand scheme of things, but it will likely raise concerns,\u201d Oppenheimer analyst Chris Kotowski wrote in a note to clients.<\/p>\n

Although\u00a0Morgan\u00a0Stanley\u2019s Archegos loss dominated the discussion on Friday, its first-quarter profit comfortably beat expectations. Its report wrapped up a robust quarter for the biggest US banks, which benefited from reserve releases and record capital markets activity.<\/p>\n

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\"Trading
Trading in \u201cmeme\u201d stocks like Game<\/a>Stop helped boost Morgan Stanley\u2019s first-quarter revenue.<\/figcaption>
Getty Images<\/span><\/figcaption><\/figure>\n<\/div>\n

A spike in trading, partly driven by a Reddit-fueled trading frenzy in \u201cmeme\u201d stocks like GameStop, drove a 66 percent jump in revenue at\u00a0Morgan\u00a0Stanley\u2019s institutional securities business.<\/p>\n

Unlike rivals JPMorgan\u00a0Chase and Bank of America,\u00a0Morgan\u00a0Stanley\u00a0and Goldman Sachs lack big consumer lending units, which has limited their exposure to loan problems during the pandemic and allowed them to focus on investment banking and trading.<\/p>\n

Morgan\u00a0Stanley\u2019s profit rose to $3.98 billion, or $2.19 per share, in the quarter ended March 31, from $1.59 billion, or $1.01 per share, a year ago.<\/p>\n

Analysts were looking for a profit of $1.70 per share, according to IBES data from Refinitiv.<\/p>\n

Net revenue jumped 61 percent to $15.72 billion.<\/p>\n

Like bigger rival Goldman Sachs,\u00a0Morgan\u00a0Stanley\u00a0benefited from an unprecedented boom in dealmaking through special purpose acquisition companies (SPACs).<\/p>\n

Global investment banking fees hit an all-time record of $39.4 billion during the March quarter, according to data from Refinitiv.<\/p>\n

Morgan\u00a0Stanley\u00a0also generated handsome fees from a spate of mergers and by underwriting numerous high-profile IPOs of companies including Affirm Holdings and AppLovin.<\/p>\n

Its investment banking revenue more than doubled to $2.6 billion.\n <\/p><\/div>\n

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Source<\/a><\/span><\/p>\n","protected":false},"excerpt":{"rendered":"

“#Morgan Stanley reveals nearly $1B loss from Archegos implosion” Morgan\u00a0Stanley\u00a0lost nearly $1 billion from the collapse of family office Archegos Capital Management, the bank said Friday, muddying its 150 percent jump in first-quarter profit that was powered by a boom in trading and deal-making. Morgan\u00a0Stanley\u00a0was one of several banks that had exposure to Archegos, which…<\/p>\n","protected":false},"author":1,"featured_media":228958,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"fifu_image_url":"https:\/\/nypost.com\/wp-content\/uploads\/sites\/2\/2021\/04\/archegos-hits-morgan-stanley.jpg?quality=90&strip=all&w=1200","fifu_image_alt":"","footnotes":""},"categories":[70897],"tags":[102282,71939,70237,71070,73986,71007],"class_list":["post-228957","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-news","tag-4-16-21","tag-banks","tag-corporate-earnings","tag-hedge-funds","tag-morgan-stanley","tag-scandals"],"_links":{"self":[{"href":"https:\/\/buradabiliyorum.com\/en\/wp-json\/wp\/v2\/posts\/228957","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/buradabiliyorum.com\/en\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/buradabiliyorum.com\/en\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/buradabiliyorum.com\/en\/wp-json\/wp\/v2\/users\/1"}],"replies":[{"embeddable":true,"href":"https:\/\/buradabiliyorum.com\/en\/wp-json\/wp\/v2\/comments?post=228957"}],"version-history":[{"count":0,"href":"https:\/\/buradabiliyorum.com\/en\/wp-json\/wp\/v2\/posts\/228957\/revisions"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/buradabiliyorum.com\/en\/wp-json\/wp\/v2\/media\/228958"}],"wp:attachment":[{"href":"https:\/\/buradabiliyorum.com\/en\/wp-json\/wp\/v2\/media?parent=228957"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/buradabiliyorum.com\/en\/wp-json\/wp\/v2\/categories?post=228957"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/buradabiliyorum.com\/en\/wp-json\/wp\/v2\/tags?post=228957"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}