(Repeats to more subscribers) ZURICH, April 22 (Reuters) - Credit Suisse said on Thursday it will boost capital reserves after taking a multi-billion dollar hit from the collapse of U.S. investment fund Archegos, while regulators announced an enforcement case against the bank over the matter. Switzerland’s second-biggest bank after UBS posted a slightly smaller-than-flagged 757 million Swiss franc ($825.97 million) first-quarter pre-tax 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 pre-tax 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 bank’s 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 hardest-hit from exposure to Archegos, which collapsed when it could not meet margin calls. Credit Suisse said it expects a residual impact of approximately 600 million francs from the matter in the second quarter of 2021. It had already exited 97% of related positions, it said. That, plus the demise of another client, Greensill Capital, has triggered internal and external probes and the ousting of a swathe of executives. On Thursday, the Swiss financial market supervisor said it had opened two enforcement proceedings against the bank related to both matters and would be appointing a third-party agent to investigate possible shortcomings in risk management. The regulator said it had taken precautionary measures, including capital surcharges as well as reductions in or suspensions of variable remuneration components. ONGOING TROUBLES U.S. rivals, some of which were quicker to exit trading positions as Archegos collapsed, produced forecast-beating profit for the first quarter. Net income at Goldman Sachs Group Inc rose nearly six-fold. Morgan Stanley disclosed an almost $1 billion loss from Archegos yet still reported a 150% jump in profit. Highlighting the strong environment, Credit Suisse posted bumper earnings in its Asia-Pacific unit, up 154% year-on-year, and a 25% pre-tax profit rise in its Swiss business - the only two divisions unscathed by the recent episodes with Archegos and Greensill. Gottstein has been grappling with limiting the longer-term damage to the bank’s reputation caused by the recent troubles and retaining both clients and staff. But broader strategic initiatives have remained pending until current shareholders, as widely expected, elect Lloyds Banking Group PLC Chief Executive Antonio Horta-Osorio as Credit Suisse’s next chairman on April 30. Analysts expect the troubles - which have hit the bank’s capital reserves - to impact earnings in future quarters, as lower capital reserves may limit its risk appetite and impact staff and client relationships. The bank on Thursday said it had cut costs by 2% year-on-year in the first quarter, mainly through lower compensation expenses. Investment banking posted a $2.6 billion pre-tax loss, as a 29% leap in fixed income sales and trading, a 23% leap in equity sales and trading revenue and much larger gains in its capital markets and advisory business failed to offset the multi-billion franc hit from Archegos that the unit recorded. Its asset management unit, meanwhile, which ran $10 billion in funds linked to Greensill, saw profit dip 30% as a rise in managed assets could not prevent revenue from falling as a result of “significant items”. The unit, which is currently undergoing an overhaul, was already a source of trouble in the fourth quarter, when it was hit with a half-billion dollar impairment on a stake in a different U.S. investment fund. Then in April, it said it had identified $2.3 billion worth of loans exposed to financial and litigation uncertainties in its Greensill-linked supply chain finance funds. Data from researcher Morningstar estimated asset flows into Credit Suisse’s Europe-domiciled fund range dropped in March, the month it announced the suspension of its Greensill-linked funds. Total net assets and the market share of its actively managed funds also fell, Morningstar estimates showed. That compared with an increase across the broader European fund market. Credit Suisse said it was enhancing due diligence in the unit following the Greensill matter, and conducting a group-wide review of risk in cooperation with its board and external advisors. Shareholders already have to stomach a slashed dividend, halted share buybacks and a share price down 20% so far this year. The bank has said further buybacks will have to wait until it returns capital to target ratios and is able to restore its dividend. ($1 = 0.9165 Swiss francs) (Reporting by Brenna Hughes Neghaiwi; Editing by Michael Shields and Christopher Cushing)