Credit Suisse ‘seriously breached’ obligations in Greensill case

CREDIT Suisse Group “seriously breached” its risk-management obligations in the Greensill Capital supply-chain financing affair, concluded Switzerland’s banking regulator as it opened enforcement proceedings against four former employees of the lender. 

Finma ordered the Swiss bank to take remedial measures, which include a periodic executive board-level review of the most important business relationships for counterparty risks, the regulator said on Tuesday (Feb 28). The lender must also record the responsibilities of its 600 highest-ranking employees in a “responsibility document”.

Finma did not name the four former Credit Suisse managers facing investigation.

Credit Suisse chief executive Ulrich Koerner said he welcomed the conclusion of the probe. “Finma’s review has reinforced many of the findings of the board-initiated independent review, and underlines the importance of the actions we have taken in recent years to strengthen our risk and compliance culture.” 

The implosion of Greensill Capital led to Credit Suisse freezing and winding down a US$10 billion group of funds linked to the failed financial services company. The Greensill-linked funds initially invested in loans backed by invoices that would be paid in a matter of weeks or months, making them relatively safe. 

But as they grew in size, they strayed from that pitch and much of the money was lent against expected future invoices, for sales that were merely predicted. Credit Suisse was ultimately forced to freeze the funds after a major insurer of the assets refused to continue coverage. BLOOMBERG

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