Credit Suisse: The Swiss bank is bouncing from disaster to disaster

4/6/21 8:00PM

Credit Suisse is not having a great year.

‍The Swiss investment bank and wealth manager announced this week that it expected to make an eye-watering $4.7bn loss from the blow-up of Archegos Capital. For context, that single loss would be enough to wipe out the entire bank's net profits from any single year from 2011-2020.

‍I O U, A LOT

‍The Archegos story is a tale as old as time on Wall Street — a hedge fund with a previously decent track record bought a bunch of stocks with a lot of leverage (i.e. money it didn't have) and everything was fine until those stocks dared to go down. The leverage magnified the losses and Archegos collapsed, leaving the banks that extended them the leverage frantically selling shares as their prices crashed. This meme sums up what happened next, but basically Credit Suisse got left holding the (biggest) bag.

For Credit Suisse the Archegos blow-up follows on from the Greensill blow-up and has left the bank reeling financially and reputationally, with 7 senior executives losing their jobs this week according to the FT.

Hyunsoo Rim

appy birthday

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JetBlue is raising its bag fees as fuel costs squeeze airlines

JetBlue will reportedly hike its bag fees, as the cost of jet fuel continues to climb amid the war in Iran. It’s the latest example of carriers finding ways to push rising costs onto travelers.

Last week, United Airlines CEO Scott Kirby said that if fuel prices remain elevated, fares would need to rise another 20% for his airline to break even this year.

As CNBC reported, when one airline raises fees, others tend to follow.

Earlier this month, JetBlue hiked its first-quarter outlook for operating revenue per seat mile to between 5% and 7%, saying that strong Q1 demand helped “partially offset additional expenses realized from operational disruptions and rising fuel costs.” Now, the carrier appears to be making moves to further boost revenue to offset those costs.

Earlier on Monday, JetBlue rival Alaska Air lowered its Q1 profit forecast. The refining margins for the carrier’s cheapest fuel option — sourced from Singapore and representing about 20% of Alaska’s overall supply — have spiked 400% since February.

JetBlue did not immediately respond to a request for comment.