Credit Suisse asks fund investors to foot £145m bill to prevent Greensill folding
Credit Suisse has riled clients who are already dealing with billions of dollars in losses from its failed supply chain finance (SCF) funds with plans to land them with a further $145m bill this year, some of which will be used to preserve Greensill Capital.
It comes after Credit Suisse’s asset management division suspended a $10bn range of funds in March that were linked to Softbank-backed Greensill, which collapsed into administration amid allegations of fraud and a lobbying scandal involving ex-prime minister David Cameron.
Although the Swiss lender has collected around $7bn of the fund’s assets so far, it has previously estimated that around $2.3bn remains at risk.
But owing to the company’s insurance policy, Credit Suisse must ensure Greensill doesn’t fold, so that it can claim for non-payment of invoices and recoup the $2.3bn.
Of the $145m being charged to investors in the failed funds, around $10m is being used to back Greensill’s remaining hundred-odd staff and to pay costs associated with the company, according to the Financial Times, who first reported the news.
Despite having led various payouts to investors since March, Credit Suisse’s latest decision will add salt to the wound for the SCF fund’s 1000 investors who could face further losses as the remaining assets are liquidated.
Investors in the funds were led to believe that its popular SCF funds were among the lowest risk investments it offered, as the loans they held were fully insured against losses and backed by invoices that were usually paid in a few weeks.
But as the funds swelled to $10bn, a substantial amount of the money was then lent through Greensill and against invoices for future sales had not taken place but were just predicted.
“The recovery work that CSAM is doing on behalf of fund investors inevitably incurs external expenses,” a spokesperson for the bank said.
“CSAM is fronting as much of this expense as possible and will seek to recoup the amount that we have incurred when appropriate”.
Credit Suisse most recently reimbursed another $400m to investors in its SCF funds linked to Greensill in August, the fourth installment since the firm’s collapse, taking the total amount returned to investors thus far to $5.9bn.