The Swiss bank and Softbank are severing supply chain fund ties, finews.com has learned. The relationship had given rise to controversy.
Led by billionaire Masayoshi Son, Softbank is pulling out a Credit Suisse fund in which it had held a stake, according to documents seen by finews.com. The document, which confirms a finews.com exclusive two weeks ago, doesn't identify Softbank by name in connection with the exit, but makes it clear it refers to the conglomerate.
The Swiss bank also tightened its investment guidelines for the funds to prevent the knotty ties that had sparked controversy of a supply chain finance fund it operates jointly with Greensill Capital. The $7.5 billion fund attempts to capture «reverse factoring» flows.
Knotty Skein
Softbank's exit represents just one strand of the unbelievably deep and complex relationship between the two firms: Softbank invested in the Credit Suisse funds, which in turn filliped start-ups in the Japanese conglomerate's Vision funds. This circular relationship wasn’t proactively disclosed to other investors in the Credit Suisse funds.
Complicating matters, Credit Suisse reportedly lent to Son himself – while the Vision Fund pumped $1.4 billion into Greensill directly. The relationship, spanning three continents, serves as a reminder of the perils of «one-bank,» or piping as much of Credit Suisse’s three main units to wealthy clients as possible.
No Losses For Investors
A spokeswoman for the Zurich-based bank emphasized that its supply chain fund investors had incurred no losses as a result of the relationship. «Credit Suisse is committed to taking steps to further protect the interests of all supply chain fund investors,» she said.
It plans to lower the maximum backing the fund can give to any single debtor, including those backed by the Vision fund. The funds will also keep using other methods of managaing investor risk, including credit insurance, Credit Suisse said.
