ZURICH, April 22 Reuters Credit Suisse said on Thursday it will boost capital reserves after taking a multibillion dollar hit from the collapse of U.S. investment fund Archegos, while regulators announced an enforcement case against the bank over the matter.

Switzerlands secondbiggest bank after UBS posted a slightly smallerthanflagged 757 million Swiss franc 825.97 million firstquarter pretax loss, as the Archegos hit wiped out gains from a bumper trading quarter.

Stripping out the 4.4 billion franc hit and other significant items, the bank said pretax profit would have been 3.6 billion francs, which would have represented its best quarter operationally in at least a decade.

A net loss of 252 million francs compared with a mean estimate of 815 million francs in the banks own poll of 17 analysts.

Alongside announcing its earnings, the bank said it will issue mandatory convertible notes MCN convertible into 203 million shares, which should net the bank more than 1.8 billion Swiss francs. That would boost its core capital level to around 13 from 12.2.

The loss we report this quarter, because of the U.S.based investment fund matter, is unacceptable, Chief Executive Thomas Gottstein said in a statement. We expect that our successful MCN placement today will further strengthen our balance sheet and enable us to support the momentum in our core franchise.

Credit Suisse has emerged as the bank hardesthit from exposure to Archegos, which collapsed when it could not meet…