The Swiss bank is returning another $1.7 billion to investors in a troubled line of supply chain funds. It warned clients of a «considerable degree of uncertainty» of how much they will ultimately get back.
Zurich-based Credit Suisse is returning another $1.7 billion from a supply chain fund it co-managed with defunct Greensill until pulling the plug last month, it said in an emailed statement on Tuesday. This brings the total cash it has been able to skim from the blow-up in the $10.1 billion line of funds to $5.4 billion, after an earlier payout.
Credit Suisse is being drawn into a deepening political, economic, and corporate scandal rippling through Britain and Australia, hitting Switzerland and Germany along the way. The Swiss bank hasn't yet quantified how big of a financial bite Greensill will ultimately be, and cautioned on Tuesday that it won't know for some time due to the legal wrangling.
Dual Disasters
The funds were primarily sold to wealthy Credit Suisse clients, reportedly including a prominent member of the al Thani ruling family of Qatar. The emirate is also Credit Suisse's largest shareholder. The Greensill issue represents one half of twin disasters to hit the Swiss lender last month – the other is Archegos, on which the bank will swallow an 4.4 billion Swiss franc ($4.7 billion) hit.
Credit Suisse has thus far recovered $2 billion from receivables which underpin a supply chain funds, it said. The bank is talking to Greensill's liquidator, Grant Thornton, and also going after potentially delinquent obligors and other creditors, it said.
Piecing The Wreckage
It will also seek to tap credit insurance on the fund's assets, it said. This has been the subject of debate: Credit Suisse has previously said it didn't learn the insurance cover would lapse until shortly before it pulled the plug on the funds on March 1. By contrast, Greensill founder Lex Greensill reportedly told liquidators he had informed the bank mid-2020 of the looming insurance gap.
The key question for the Swiss lender is what it can pick from the collapse of Greensill, which in turn was heavily exposed to Sanjeev Gupta's GFG Alliance and Liberty Commodities. The retrieval is likely to be waged in a years-long legal battle involving regulators in at least four countries.
Undesirable Showdown
Credit Suisse has signaled it will take a hard line on reimbursing investors like the al Thanis for their losses – an undesirable confrontation for a private bank to the world's wealthy. The bank has previously raised the specter of fraud at entities in the funds.
«It is important to note that in many of these cases of non-payment or default, the obligors are firms with tangible assets,» Credit Suisse said on Tuesday. «The current assessment is that there is potential for recovery in these cases although clearly there is a considerable degree of uncertainty as to the amounts that ultimately will be distributed to investors in respect of the funds.»
