Credit Suisse foresees $4.7bn charge over hedge fund default

Credit Suisse foresees $4.7bn charge over hedge fund default
Swiss investment bank Credit Suisse said it has suspended a share buyback program and reduced its dividend in the wake of the default. (Reuters/File)
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Updated 07 April 2021

Credit Suisse foresees $4.7bn charge over hedge fund default

Credit Suisse foresees $4.7bn charge over hedge fund default
  • The bank expects to report a loss of 900m francs for Q1

GENEVA: Swiss bank Credit Suisse on Tuesday announced the departure of two top executives and said it expects a one-time charge of 4.4 billion Swiss francs ($4.7 billion) in connection with a previously announced default of a US hedge fund on margin calls.

The Zurich-based bank said it provisionally expects to report a loss of 900 million francs for the first quarter — though final figures are still being worked out. Credit Suisse said it has suspended a share buyback program and reduced its dividend in the wake of the default.

“The significant loss in our prime services business relating to the failure of a US-based hedge fund is unacceptable,” CEO Thomas Gottstein said. “Serious lessons will be learned.”

The bank said it has launched two investigations “to be carried out by external parties,” and said Brian Chin, the head of Credit Suisse’s investment bank, and chief compliance and risk officer Lara Warner will leave the bank.

Credit Suisse didn’t identify the hedge fund or the other banks affected, or give other details of what happened. News reports identified the hedge fund as New York-based Archegos Capital Management, whose default also ensnared Japan’s Nomura.

The Financial Times reported last month that Archegos had large exposures to ViacomCBS and some Chinese technology stocks and was hit hard after a drop in shares of the US media group in March.

A margin call is triggered when investors borrow using their stock portfolio as collateral and have to make up the balance required by banks when the share prices fall and the collateral is worth less.


Saudi bank deposit growth accelerated to 11-month high in February

Saudi bank deposit growth accelerated to 11-month high in February
Updated 23 min 45 sec ago

Saudi bank deposit growth accelerated to 11-month high in February

Saudi bank deposit growth accelerated to 11-month high in February
  • Bank deposit growth was the fastest since March 2020

RIYADH: Bank deposits in Saudi Arabia grew during February at the fastest pace since March 2020 as the economy continued to rebound from the coronavirus pandemic.

Deposits reached SR1.96 trillion ($522.5 billion) at the end of February, an increase of 1.83 percent, the most since the previous March’s 1.92 percent gain, Al Eqtisadiah reported, citing SAMA data.

On an annual basis, bank deposits in Saudi Arabia increased by 10.2 percent, or SR180.47 billion. Individual and corporate deposits, which made up 74.6 percent of total deposits, increased by 9.8 percent year over year.

Demand deposits increased 14.2 percent to SR1.29 trillion in the 12 months to the end of February, making up 88 percent of total deposits with savings and foreign deposits accounting for the rest.


Egypt and Russia agree to resume all flights, including to resorts

Egypt and Russia agree to resume all flights, including to resorts
Updated 23 April 2021

Egypt and Russia agree to resume all flights, including to resorts

Egypt and Russia agree to resume all flights, including to resorts
CAIRO: Egypt and Russia have agreed to resume all flights between the two countries in a call between their presidents, Abdel Fattah El-Sisi and Vladimir Putin, Egypt’s presidency said in a statement.
Flights to resort destinations Sharm Al-Sheikh and Hurghada were suspended after a Russian passenger plane crashed in Sinai in October 2015, killing 224 people.
The Egyptian statement did not specify a timeline for the resumption of flights, but Russia’s Interfax news agency reported this week that flights could resume in the second half of May.
An Airbus A321, operated by Metrojet, had been taking Russian holiday makers home from Sharm el-Sheikh to St. Petersburg in 2015, when it broke up over the Sinai Peninsula, killing all on board. A group affiliated with Daesh militants claimed responsibility.
The decision to resume flights followed “the joint cooperation between the two sides on this issue, and based on the standards of security and convenience provided for visits at Egyptian tourist destination airports,” the statement said.

Egypt raises domestic fuel prices for first time since subsidy reform

Egypt raises domestic fuel prices for first time since subsidy reform
Updated 23 April 2021

Egypt raises domestic fuel prices for first time since subsidy reform

Egypt raises domestic fuel prices for first time since subsidy reform
RIYADH: Egypt’s price-setting committee raised domestic fuel prices on Friday for the first time since it was formed in October 2019 following the completion of subsidy reforms, the petroleum ministry said in a statement.

Prices were last raised in July 2019 when Egypt, a net oil importer, finished phasing out subsides on fuel products as part of a reform program backed by the International Monetary Fund. Prices had remained stable over the past year after being lowered in April 2020 and October 2019.

The prices of 80-octane, 92-octane, and 95-octane fuel were raised by 0.25 Egyptian pounds each, to 6.25 Egyptian pounds ($0.40), 7.5, and 8.5 pounds per liter, respectively, the statement said.

The pricing committee’s mechanism links energy prices to international markets, and takes into account the exchange rate as well as the impacts of the coronavirus pandemic, the statement said.

Egypt lowered fuel prices in October 2019 following several rounds of price hikes as part of an austerity program that triggered discontent, including protests against President Abdel Fattah El-Sisi.

Saudi share of Gulf economy rose to almost 50% in 2020

Saudi share of Gulf economy rose to almost 50% in 2020
Updated 23 April 2021

Saudi share of Gulf economy rose to almost 50% in 2020

Saudi share of Gulf economy rose to almost 50% in 2020
  • Saudi GDP contracted 11.8 percent to $700.1 billion in 2020
  • UAE GDP fell 15.9 percent to $354.3 billion

RIYADH: Saudi Arabia increased its share of the GCC economy to almost half in 2020 as it weathered the COVID-19 pandemic better than its neighboring Arab states.

The Kingdom’s made up 49.8 percent of the bloc’s economy in 2020, up from 48.4 percent in 2019, Al Eqtisadiah newspaper reported, citing data from the International Monetary Fund (IMF) and Gulf statistical agencies.

Nominal gross domestic product (GDP) for the six GCC countries fell 14.3 percent in 2020 to $1.41 trillion, while Saudi GDP contracted 11.8 percent to $700.1 billion.

The UAE’s economy shrank 15.9 percent to $354.3 billion, representing 25.2 percent of GCC output.

Qatar had the third largest regional economy in 2020. It shrank 16.9 percent to $146.1 billion, representing 10.4 percent of GCC GDP.


Saudi vegetable traders accuse consumers over price increases

Saudi vegetable traders accuse consumers over price increases
Updated 23 April 2021

Saudi vegetable traders accuse consumers over price increases

Saudi vegetable traders accuse consumers over price increases
  • Consumers buy more than they need during Ramadan, traders said

RIYADH: Vegetable traders and wholesalers in Saudi Arabia have blamed over-buying by consumers for price rises during the first days of Ramadan.

Prices have now returned to normal after doubling in some cases following a flurry of purchases at the beginning of the holy month, they told Al Watan newspaper.

The increase in vegetable prices was limited to 6 or 7 local agricultural products, while imported product prices are fixed, they said. There is no shortage of vegetables in the Kingdom’s markets, they added.

“We witness the unjustified rush of consumers of double shopping that exceeds the actual need, every year with the advent of the holy month, not only for vegetables, but for various food products,” a vegetable merchant said.

A vegetable trader in the Kingdom said that citizens should maintain the usual consumption of vegetables in Ramadan to ensure the stability of prices. He said that most of the customers deliberately buy above their actual needs at the beginning of Ramadan, which causes increased demand and higher prices.

“The farmers and suppliers are the ones who set the price and cause it to rise when the demand from consumers increases, while our role does not exceed the disposal of the product with a small profit,” he said.

Consumers on the other hand accused traders, farmers and suppliers of unjustified price increases with the advent of Ramadan.