Credit Suisse recovers half of Greensill funds

3 min read
EMEA
Christopher Spink

Credit Suisse has recovered more than half of the assets put in supply chain finance funds linked to Greensill Capital, which collapsed last month. The failure led to the suspension of the Credit Suisse funds which had initially raised US$10bn from investors.

Before the latest announcement, US$3.1bn had already been paid back to investors. Now a further US$2bn has been collected and Credit Suisse said it would pay back a further US$1.7bn. That will leave a further US$600m cash in the funds, which has not so far been distributed. In all, the total cash, including that already returned, amounts to US$5.4bn.

In a statement, Credit Suisse Asset Management said it would continue to try to secure further recoveries and make payments “as soon as feasible in one or more instalments until the investors receive the funds’ total collected net liquidation proceeds”.

The firm is in discussions with Grant Thornton, joint administrators of Greensill Capital (UK) Ltd, and is also engaging directly with creditors of the failed entity including “potentially delinquent obligors”. It is also filing insurance claims where relevant non-payment or default has occurred.

Credit Suisse hinted that if the claims could be validated there was a good chance of further repayments, since in many cases “the obligors are firms with tangible assets”.

It said: “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.”

It also did not rule out pursuing legal claims on behalf of fundholders. A further update will be made by the end of April.

Separately, investor adviser Glass Lewis recommended that shareholders should oppose the re-election of Andreas Gottschling to Credit Suisse’s board at the annual general meeting on April 30.

He is chair of the bank’s risk committee, which not only failed to avert the Greensill problems but also saw it lose SFr4.4bn (US$4.7bn) from exposures in its prime broking business to Archegos, the fund which failed in late March.

As a result of this, chief risk and compliance officer Lara Warner has already stood down and Brian Chin, chief executive of the investment bank, will leave at the end of this month.

Glass Lewis said Gottschling should bear ultimate responsibility for the problems.

"In our view, in order to regain shareholder trust in light of the substantial financial and reputational damage that the company is facing … shareholders would be better served by a change in leadership of the risk committee," it said.

Gottschling was a member of the risk executive committee and divisional board at Deutsche Bank from 2005 to 2012. The German lender was subsequently found to have had failings in risk management.

After Deutsche, he joined consultant McKinsey as a senior adviser in its risk practice, before becoming chief risk officer at Austrian lender Erste Bank for three years to 2016. He is also a supervisory board member of Deutsche Boerse.

Credit Suisse’s executive board directors have already agreed to forego their proposed bonuses for 2020. There are reports that bonuses of up to US$600m earmarked for senior bankers in the first quarter of 2021 will be reduced as well despite many parts of the investment bank enjoying strong trading.