ZURICH, July 29 (Reuters) - A "lackadaisical" attitude towards risk and "a lack of accountability" were to blame for Credit Suisse"s (CSGN.S) $5.5 billion loss on investment fund Archegos, according to a review published on Thursday, as the bank reported a near-80% fall in second-quarter profit. The collapse of Archegos rocked Wall Street in March as its highly leveraged stock bets went sour, sending banks scrambling for the exit. In a $10 billion bloodbath, Credit Suisse was the biggest loser, a devastating double whammy for a bank already reeling from the insolvency of a key associate, Greensill Capital. Archegos is still hitting Credit Suisse"s bottom line. Net profit of 253 million Swiss francs ($278.45 million) missed average forecasts for 334 million Swiss francs as it absorbed an additional $653 million loss from the fund"s collapse and amid a general slump in trading. In a damning assessment of what went wrong, an independent review unveiled along with the results on Thursday repeatedly criticizedthe bank"s risk management practices, though it did add there was no evidence of fraudulent or illegal activity. "The Archegos-related losses sustained by Credit Suisse (CS) are the result of a fundamental failure of management and controls in CS"s Investment Bank and, specifically, in its Prime Services business. The business was focused on maximizing short-term profits and failed to rein in and, indeed, enabled Archegos"s voracious risk-taking," the 165-page review by law firm Paul Weiss, Rifkind, Wharton & Garrisson said. (To read the report, click https://www.credit-suisse.com/about-us/en/reports-research/archegos-info-kit.html) The bank said in response that it would "put risk management at the heart of our decision-making processes". Shares of the bank pared early losses to trade down 2.4% by 1045 GMT, taking their losses to 22% so far this year. The European bank index (.SX7P) rose 1.8% and is up about 24% year to date. Analysts had expected a nearly 600 million franc hole caused by more losses at Archegos and further weakness in the bank"s trading and advisory businesses to bring second-quarter net profit down to a quarter of its value a year ago. Excluding Archegos and other significant items, Credit Suisse said pre-tax income would have dropped 11%. Credit Suisse said action has been taken against 23 staff over Archegos, with nine fired and a total of $70 million in monetary penalties taken from all of them. Under new Chairman Antonio Horta-Osorio, it is trying to turn the page after a swathe of investigations, executive changes, and divisional reshuffles. Management is promising to unveil a strategic overhaul by year-end. An exodus of senior dealmakers and traders from its investment bank, and plans to reduce risk in its prime brokerage unit, have made the changes especially felt within that division. read more The bank said on Thursday that a provisional capital buffer for Archegos has been removed, but a buffer for Greensill remained. It said it was in advanced talks with some creditors to recover some of the $10 billion of client investments linked to Greensill. It also said it had been accruing for dividends during the quarter but the size of the payout had yet to be determined. "Management provided some reassurance on the call suggesting this quarter"s focus was on dealing with the fall-out of Archegos and Greensill, but we could potentially return to a more "business as usual" quarter as early as 3Q21," Citi analyst Andrew Coombs wrote in a note. LEADING WEALTH MANAGER WITH A CULTURE PROBLEM Investors have been waiting to see whether troubles at Credit Suisse, which have also left clients in its asset management business directly exposed to potential Greensill losses, have affected prized relationships with the ultra-wealthy. Credit Suisse on Thursday reported 7.3 billion francs in net asset outflows from its wealth management businesses, an indicator of a loss in business from rich clients, for the second quarter. Chief Financial Officer David Mathers told journalists on a call that 4.2 billion francs of the outflows were related to its efforts to limit its risk in Asia. "Operationally, CS has been able to meet expectations on the whole," ZKB analysts said in a note, adding the headline profit miss was related largely to legal and restructuring provisions. "However, net new money is showing signs of slowing down with outflows of 4.7 billion francs," the analysts said, referring to the group-wide figure which includes flows for businesses outside wealth management. Earlier this week, Credit Suisse appointed Goldman Sachs (GS.N) partner David Wildermuth as its new chief risk officer, as it seeks to turn the corner on recent scandals. read more REVENUES FALL A 41% fall in investment banking revenues showed the broader impact of the scandals to be slightly more pronounced than analysts anticipated, as its capital markets business posted a nearly 10% decline on an un-adjusted basis and its advisory revenues fell 37% "due to timing of deal closings". That combined with the $653 million Archegos hit pushed investment banking to a pre-tax loss. On the trading side, adjusted revenues from equity sales and trading fell 17% decline excluding Archegos. Fixed income sales and trading dropped 33%. Trading revenues also fell at major U.S. and European banks in the second quarter compared to 2020 when unprecedented market volatility during the early months of the coronavirus pandemic helped drive record volumes. Credit Suisse has said it wants to pare back its prime brokerage unit, which conducts business with hedge funds and was responsible for the Archegos ties. The downcast earnings marked a notable contrast to the sunny outlook presented on the same day by Lloyds (LLOY.L), which until April had been run by Credit Suisse"s new chairman. read more Nearer rivals, including UBS (UBSG.S) and Julius Baer (BAER.S), have also put Credit Suisse"s misfortune in stark relief, as frothy markets and high client activity levels have continued to help private bankers generate higher earnings off the rich. read more ($1 = 0.9086 Swiss francs) Reporting by Brenna Hughes Neghaiwi, editing by Kirsti Knolle, Michael Shields and Kim Coghill Our Standards: The Thomson Reuters Trust Principles.