Archegos is a Greek word denoting leadership. The place where the eponymous family office led UBS, and a growing roll call of investment banks, was into a morass. The Swiss group has revealed a surprise $774m hit to operating profits due to an Archegos “trading loss” at its prime brokerage in the first quarter, with another $87m expected this period.
UBS majors in wealth management, where risks and capital requirements are low. Its shares have been rewarded accordingly. But banking is prone to dangerous category slippage.
Archegos resembled a hedge fund more than a lightly regulated family office. UBS’s investment bank is meanwhile supposed to focus on supporting key clients of other divisions. That mission must be pretty elastic to include servicing a speculator using numerous other prime brokers, who support hedge funds with loans and derivatives deals.