Credit Suisse execs ‘overruled’ risk managers on Greensill loan
Senior Credit Suisse executives reportedly approved a $160m loan to beleaguered finance firm Greensill Capital despite concerns raised by the bank’s risk managers.
London-based risk managers at the Swiss bank rejected the loan before chief risk and compliance officer Lara Warner signed off on the loan in October, according to the Financial Times.
“There is some finger pointing going on,” one person told the FT. “All the risk teams are telling the probe that they said no, but it was escalated and overruled.” Another person said the loan was “hugely controversial” and “imposed from above.”
Greensill Capital, advised by former PM David Cameron, specialises in supply-chain finance which provides short-term credit to businesses.
Greensill bundled the debt and sold it to financial firms like Credit Suisse. In Australia Greensill lost a legal battle to get its insurer Bond and Credit Company to extend its insurance beyond 1 March. This led to Credit Suisse suspending redemptions on a $10bn suite of Greensill-linked funds.
A significant proportion of these funds are reportedly comprised of loans from Greensill to steel company GFG which has now started to default on the debt.
Earlier this week the finance firm, founded by Australian financier Lex Greensill, filed for insolvency and said there was “no conceivable way” the loan, which now stands at $140m, could be repaid.
Credit Suisse said the loan “is secured against cash and receivables.”