Credit Suisse, the Swiss multinational investment bank and financial services company, has recently grabbed the headlines in the financial markets for its huge losses from the collapse of Archegos Capital Management, a US-based family office. The debacle has cost the bank more than $5 billion in losses and raised serious questions about its risk management and governance practices. However, another important aspect of the story that has received less attention is the impact of the Archegos scandal on the Credit Suisse’s erstwhile thriving business of trading complex financial instruments known as temerrüt takasları, or credit default swaps (CDS). In this article, we will explore what temerrüt takasları are, how Credit Suisse got involved in the Archegos mess, and what the future holds for the bank’s CDS business.

What Are Temerrüt Takasları?

Temerrüt takasları are a type of financial derivatives that allow investors to bet on the creditworthiness of a bond issuer or a borrower. In simple terms, a CDS is an insurance contract that pays the buyer a payout if the issuer of the underlying bond defaults on its debt obligations. The seller of the CDS receives regular premiums from the buyer, similar to an insurance policy. The value of a CDS is determined by the market’s perception of the default risk of the underlying bond issuer. If the market thinks that the issuer is more likely to default, the price of the CDS will go up, and the seller will have to pay more in case of a default. Conversely, if the market perceives the creditworthiness of the issuer to be strong, the price of the CDS will go down, and the seller will receive smaller premiums.

Credit Suisse’s Involvement in Archegos

Archegos Capital Management was a hedge fund run by Bill Hwang, a former star trader at the now-defunct Tiger Management. The fund was known for taking highly leveraged bets on a concentrated portfolio of stocks, such as ViacomCBS and Discovery, which were under pressure due to the pandemic and the shift to digital media. Archegos used swap contracts, including CDS, to build positions in these stocks without disclosing its holdings to the market. When the stocks started to decline in March 2021, triggering margin calls from Archegos’ prime brokers, the fund was unable to meet its obligations, and its positions were liquidated at fire-sale prices. This resulted in massive losses for Archegos’ lenders, who were left holding the bag for billions of dollars in unpaid debts.

Credit Suisse was one of the prime brokers to Archegos, along with several other big banks, including Goldman Sachs, Morgan Stanley, and Deutsche Bank. The Swiss bank had exposure to Archegos through its CDS business, which had been growing rapidly in recent years. According to reports, Credit Suisse had sold more than $10 billion worth of CDS protection to Archegos, which turned out to be worthless when the fund collapsed. As a result, Credit Suisse lost more than $5 billion in the Archegos debacle, which wiped out its entire quarterly profit and could dent its capital position for years to come.

The Fallout from Archegos for Credit Suisse’s CDS Business

The Archegos scandal has brought Credit Suisse’s CDS business under the spotlight, exposing its vulnerabilities and raising questions about its risk management framework. The bank was already under regulatory scrutiny for its role in the 2018 fraud scandal involving Mozambique’s hidden loans, which cost it more than $2 billion in fines and penalties. The Archegos episode has added to the bank’s woes, as it faces calls for better supervision and stricter rules for its derivatives business. The Swiss Financial Market Supervisory Authority (FINMA) has launched an investigation into Credit Suisse’s risk management practices and its internal controls, and could impose fines or other sanctions if it finds any violations.

The Archegos debacle has also impacted the CDS market more broadly, as investors and regulators have become concerned about the concentration of risk in a few large players. Several big banks, including UBS and Deutsche Bank, have reported losses from their exposure to Archegos, and the fallout could lead to a reassessment of the risks and rewards of trading CDS. According to Bloomberg, UBS had nine times as much exposure to Archegos as it had in its own capital, while Deutsche Bank had 18 times as much. These figures underscore the magnitude of the potential losses from CDS trading and the need for better risk management practices.


Credit Suisse’s temerrüt takasları business has been at the heart of the Archegos scandal, which has cost the bank more than $5 billion in losses and raised serious questions about its risk management and governance practices. The fallout from the debacle could have far-reaching implications for the CDS market as a whole, as investors and regulators take a closer look at the concentration of risk in a few large players. While derivatives trading can be lucrative for banks, it also comes with significant risks, and the Archegos episode should serve as a cautionary tale for those who want to ride the wave of complex financial instruments without fully understanding the potential downsides.