Credit Suisse warns of Greensill collapse

Credit Suisse has warned it could face a charge stemming from the collapse of supply chain finance group Greensill Capital.

The Swiss bank was quick to assess the extent of its exposure to Greensill, a SoftBank-backed company that claimed to make finance fairer but collapsed into administration this month after its insurers took over. refused to renew coverage.

Its founder, Lex Greensill, was a client of Credit Suisse private banking, while the company also had relationships with its investment banking and asset management services.

In a business update on Tuesday, Credit Suisse said $ 50 million of a $ 140 million bridge loan it made to Greensill last year had been repaid.

The bank added that its priority was to recover the money that customers had invested in supply chain finance funds, which it marketed and provided exposure to loans made by Greensill. These funds, which had a net asset value of $ 10 billion, were suspended on March 1.

“Initial redemption repayments totaling $ 3.1 billion across the four funds were made from March 8, 2021,” the bank said in the statement.

However, the bank warned that “although these issues are still at an early stage, we note that it is possible that Credit Suisse will incur costs for these matters.”

Credit Suisse has previously said that the $ 90 million outstanding loan to Greensill has been securitized against a basket of good quality debt from the supply chain finance group.

Loan exposed loopholes in Credit Suisse “Integrated platform” strategy, which aims to increase profits by selling products from multiple divisions to ultra-rich entrepreneurs.

The Financial Times reported last week that Credit Suisse executives canceled internal risk managers who expressed concern over the $ 160 million loan to Greensill Capital.

The loan was finally signed by Lara Warner, Credit Suisse’s chief risk and compliance officer, in October. During his administration request last week, Greensill told a UK court there was “no way.” he could pay off the debt.

Since Credit Suisse suspended $ 10 billion supply chain finance funds linked to Greensill on March 1, the bank’s shares have come under pressure.

Andreas Venditti, analyst at Vontobel, said this was due to “significant concerns and open questions about the amount of potential losses. [and] seriousness of the risk of litigation ”.

Along with Greensill’s disclosure, Credit Suisse said it achieved the highest pre-tax profits in a decade in January and February. “Our investment banking division is benefiting from a particularly strong performance in the capital markets issuance business and continued good performance in sales and trading,” the bank said.

The bank’s shares rebounded 2% in early trading on Tuesday.

Thomas Gottstein, chief executive of Credit Suisse, is due to speak at Morgan Stanley’s finance conference on Tuesday.

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