Credit Suisse report into Greensill failings hit by delays

Keystone / Urs Flueeler

Credit Suisse’s much-anticipated report into its own failings around the collapse of Greensill Capital has been delayed as the Swiss lender prepares for a spate of legal battles.

The bank had hoped to release findings from the investigation it commissioned — carried out by Deloitte and Swiss law firm Walder Wyss — at its third-quarter results next month, according to people briefed on the plans. But that deadline will now be missed as the report has yet to be finalised with the stakes rising for Credit Suisse in recent days after a raid on its headquarters by Swiss police. Documents were seized two weeks ago in connection with the Zurich public prosecutor’s criminal investigation into Greensill’s activities and the way in which Credit Suisse funds that financed the British company’s contentious lending schemes were managed and marketed.

Credit Suisse was forced to suspend a $10 billion range of Greensill-linked funds over a lapsed insurance policy in March, which led to the collapse of the specialist finance company and sparked regulatory probes in Switzerland, the UK and US. While the Swiss criminal investigation is not currently directed against Credit Suisse, there is a fear among some senior staff at the bank that its remit could be extended, according to people with knowledge of the discussions. A draft of the Greensill report was discussed at a Credit Suisse board meeting last weekend. Executives are considering what impact the Greensill report will have on their attempts to negotiate the return of billions of dollars that was lent by Greensill, draw up insurance claims on losses and prepare for lawsuits from its clients whose money was held in the funds. “A lot of angry investors think Credit Suisse mis-sold them funds,” said a person involved in the bank’s planning.“The legal issues will more likely be a civil matter than a criminal matter.”

Of the $10 billion suspended in the Greensill funds, $7 billion has so far been collected. Credit Suisse has warned that $2.3 billion will be difficult to recoup and last week said it was not confident in recovering all of a further $400 million lent to a range of small businesses. “There are a number of cases of late payments which are being addressed,” the bank said in a message to investors. “[These include] cases where discussions are under way with regard to a potential restructuring of the debt, which may mean full repayment is no longer possible.”

Given the sensitive nature of the case, Credit Suisse will publish only select details from the Greensill investigation. This marks a contrast to an earlier report the bank commissioned into its failings around the collapse of family office Archegos Capital in March. Credit Suisse published the entirety of that report written by law firm Paul Weiss in July, which said the bank’s $5.5 billion trading loss on Archegos was the result of a “fundamental failure of management and controls” in the investment bank and a “lackadaisical attitude towards risk”. “If there is a theme at all so far, it has been interesting to see how many of the lessons or issues from Archegos appear again in the Greensill report,” said a person with knowledge of the initial findings. “There are common features in how Credit Suisse is run and managed that needs to change.” Credit Suisse declined to comment.

Copyright: The Financial Times 2021