Credit Suisse Tightens Hedge Fund Limits After Archegos Hit
- Bank lost $4.7 billion on swaps with Bill Hwang’s Archegos
- New terms would shift swaps to dynamic margining from static
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Credit Suisse Group AG is tightening the financing terms it gives hedge funds and family offices, in a potential harbinger of new industry practices after the Archegos Capital Management blowup cost the Swiss bank $4.7 billion.
Credit Suisse has been calling clients to change margin requirements in swap agreements so they match the more restrictive terms of its prime-brokerage contracts, people with direct knowledge of the matter said. Specifically, Credit Suisse is shifting from static margining to dynamic margining, which may force clients to post more collateral and could reduce the profitability of some trades.