- Morgan Stanley's exposure to Archegos Capital led to a loss of $911 million in the first quarter.
- The implosion of Archegos Capital last month sparked upwards of $10 billion in losses for banks.
- Still, Morgan Stanley's Archegos hit pales in comparison to the multi-billion-dollar losses at Nomura and Credit Suisse.
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Morgan Stanley's liquidation of its exposure to Archegos Capital last month didn't escape the bank from sizable losses.
The bank said in its first quarter earnings that it lost $911 million in the first quarter related to a credit event for a single prime brokerage client. That prime brokerage clients was Archegos Capital.
"The current quarter includes a loss of $644 million related to a credit event for a single prime brokerage client, and $267 million of subsequent trading losses through the end of the quarter related to the same event," Morgan Stanley said.
Despite the loss, Morgan Stanley managed to beat analyst estimates for its first-quarter revenue and profit.
The bank, like several others, had provided Archegos with equity swap derivatives, which enabled the family office to build extreme leverage in a handful of concentrated names, including ViacomCBS. But an equity offering from ViacomCBS led to a sharp decline in the stock, which triggered a wave of margin calls that Archegos was unable to meet.
A $20 billion liquidation of Archegos Capital's holdings among several banks quickly ensued, ensnaring a number of stocks including ViacomCBS and Discovery Inc.
But Morgan Stanley's loss pales in comparison to other banks like Nomura and Credit Suisse, which lost upwards of $2 billion and $5 billion, respectively. Credit Suisse was still selling off its exposure to Archegos positions earlier this week. JPMorgan estimates that the total Archegos-tied loss experienced by banks is $10 billion.
Morgan Stanley shares slid roughly 2% in early trading on Monday.