Credit Suisse shamed over links to collapsed finance firm Greensill
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Credit Suisse shamed by financial regulators for its ties to collapsed financial company Greensill
Troubled Credit Suisse has been publicly shamed by financial regulators for the third time in two years – this time over its relationship with a collapsed supply chain finance firm.
Greensill’s demise in March 2021 prompted the Swiss bank to abruptly close funds in which its clients had invested more than £8bn.
Finma, Switzerland’s financial regulator, concluded after an investigation into the episode that the lender had “seriously breached its regulatory obligations.”
Disgraced: Founded by Lex Greensill (pictured), Greensill collapsed in March 2021, prompting Credit Suisse to close funds in which more than £8bn had been invested.
It follows two previous reprimands in 2021 for Credit Suisse, one for a scandal in which it was caught spying on top executives and another for lending to Mozambique, linked to a corruption scandal, which eventually plunged the country into a financial crisis.
Greensill – which was founded by Australian Lex Greensill and used former Prime Minister David Cameron as an adviser – made its money through a business model with invoices from suppliers to companies that bought their goods or services.
Greensill would step in and pay the bill immediately rather than keep the supplier waiting, then claim the full purchase price from the buyer and make a profit on the difference.
As of 2017, some of these claims have been packaged as financial products and transferred to funds controlled by Credit Suisse.
Finma’s investigation found that Credit Suisse had “little knowledge and control over the specific claims” and that while the Swiss bank was the manager of the funds, it was left to Greensill to select and assess the claims.
Over time, the funds became riskier and contained anticipated future billing claims that had not yet accrued, the watchdog found.
A banker’s concerns about extending a loan to Greensill were allayed.
Finma also said the bank had made “partially false and overly positive statements” about the claims.
As a result of the investigation, Credit Suisse has been instructed to periodically review approximately 500 of its key business relationships.
Ulrich Koerner, CEO of Credit Suisse, said the announcement “underlines the importance of the actions we have taken over the past few years to strengthen our risk and compliance culture.”