Finance

Credit Suisse flags possible charge from Greensill collapse fallout

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Key Points
  • Credit Suisse warned it might incur charges following the collapse of its Greensill-linked supply chain finance funds and other dealings with the specialty firm.
  • The lender has been facing the fallout from the collapse of $10 billion worth of funds linked to British financial services firm Greensill Capital.
  • Greenspill last week filed for insolvency after losing the support of its main backers.
Credit Suisse bank.
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Credit Suisse on Tuesday warned it might incur charges following the collapse of its Greensill-linked supply chain finance funds and other dealings with the specialty firm.

The lender has been facing the fallout from the collapse of $10 billion worth of funds linked to British financial services firm Greensill Capital, which last week filed for insolvency after losing the support of its main backers.

"While these issues are still at an early stage, we would note that it is possible that Credit Suisse will incur a charge in respect of these matters," it said in a statement.

Credit Suisse has paid investors some $3.1 billion in redemptions from the four funds thus far, or just under a third of their value shortly before suspension, and said it would be announcing further cash distributions over coming months.

Chief Executive Thomas Gottstein, who is due to present at the Morgan Stanley European Financials Conference later on Tuesday, has been trying to move the bank on from a string of bad headlines, spanning a spying scandal that embroiled his predecessor Tidjane Thiam just over a year ago to paying out millions of dollars to settle a legacy legal case.

Its share price has fallen 10.6% since the bank announced its supply chain funds were being frozen on March 1.

The supply-chain financier Greensill began to unravel in early March after losing insurance coverage for its debt repackaging business, prompting Credit Suisse to freeze funds linked to it.

Switzerland's second-largest bank has hired external firms to help deal with regulators and insurers amid questions over the contracts that underpinned Greensill's security.

Japanese insurer Tokio Marine, which provided $4.6 billion of coverage to Greensill credit notes through an Australian unit, is investigating the validity of those policies. A person with knowledge of the matter has said these were directly linked to the $10 billion Credit Suisse funds.

Credit Suisse on Tuesday said its asset management division, which sold the funds to investors, was working closely with Greensill's administrator, Grant Thornton, and with other parties to facilitate the recovery of funds.

It has also been taking steps to recover a $140 million loan to Greensill in Australia.

It has now recovered some $50 million from the bridge loan, it said on Tuesday, leaving its outstanding collateralized loan at $90 million.