Greensill funding scandal: Who is targeting Finma and who isn’t?

When it comes to the scandal surrounding Greensill funds Finma has launched enforcement proceedings against the top four in CS, which could result in a one-year professional ban at worst or a trade off at best.

Since the investigation was announced, the banking world has been baffled as to who the top four bankers involved are. A “Handelszeitung” survey shows a history of who was targeted and who wasn’t.

Iqbal Khan

Iqbal Khan (47), CS’s former head of international wealth management, is mentioned here and there because wealth management was also officially accountable to him, at least until he left in spring 2019. However, Kahn is not on Finma’s list. as research shows.

This was also confirmed by a spokesperson for UBS, where Khan is currently in charge of asset management: “Finma is not pursuing any enforcement action against Iqbal Khan and was never questioned during Finma’s two-year investigation into the Greensill case.”

There’s probably a reason Finma never targeted him: While Khan was formally responsible for asset management at CS, he wasn’t in charge of the business. The indifferent head of the problem division was Eric Varvel, the bank’s head of global wealth management. The longtime investment banker from New York had closed the division and effectively ran the division as a “company within a firm,” according to one of the people involved. It is equipped with its own board of directors and its own remuneration system.

Thomas Gottstein

According to research by “Handelszeitung”, Finma has initiated enforcement proceedings against former CS boss Thomas Gottstein (59). This was also reported by “SonntagsBlick”. Gottstein was chairman of Credit Suisse until the fall of 2022. He then resigned for health reasons.

In fact, he was already dismissed in the spring of 2021 after the Committee on Tactical Crises under then-President Antonio Horta-Osorio took power in CS. It’s no surprise that Gottstein has an enforcement case to deal with. He took over the bank in 2020, a year later the bankruptcy of the Archegos hedge fund and the collapse of the Greensill funds sold by CS punched holes in the vaults. However, as research has shown, no major abuses have been identified during his reign. In the Greensill case, Gottstein should have reacted earlier and more decisively, for example, in the summer of 2020. Compliance Manager. These are wrong decisions. But for a red card, for a professional ban, these management errors shouldn’t be enough. At best, Gottstein could get a reprimand from Finma if he encounters the omissions of the then CS boss.

The former head of Julius Baer has already done so in the case of Boris Collardi. Julius Baer was involved in numerous money laundering scandals due to the lack of quality of risk and compliance at the bank he managed until 2017. However, Finma was unable to prove Collardi personally at fault and left him with a “yellow card”.

Eric Varvel

Eric Varvel has been mentioned many times, sources believe it is very reasonable that FINMA is reviewing him with enforcement proceedings. The American was actually the head of wealth management and did not let himself be convinced. Greensill sold its funds with great devotion, promising customers the yolk of the egg. CS’ supply chain products would be like bonds, enabling investors to generate “attractive short-term returns.”

In the fall of 2022, Gottstein parted ways with Varvel, a decades-long reputation at the bank for his excellent relations with CS’ main shareholder, Qatar. The “Financial Times” once described Vervel this way: He was 95 percent client man and only 5 percent risk man.

The question is whether Varvel, with his distinctive talent as a seller, has sufficiently drawn the attention of investors to the risks of mutual funds. For him personally, the calculation definitely worked. He should have earned about 80 million francs in his 30 years at CS.

Michel Degen

Under Varvel, he was the cornerstone of Asset Management at Credit Suisse and was appeased by Alex Greensill. The Australian company delivered the loans, packaged them in securities and also arranged insurance before the securities were packed into CS funds.

Degen marketed products that were deadly to CS. But the computer technician, who saw himself as the inventor of the entire industry, had completely underestimated the risks. After the Greensill investigation, Finma’s decision was devastating: Asset management had “little knowledge and control”. As a result, the bank “severely violated regulatory obligations”. As such, there’s a lot to suggest that Degen is also in Finma’s sight.

Laura Warner

Former CS boss Tidjane Thiam made the Australian-American the bank’s top chief in 2015 and praised him as a “rising star” when promoted. But his track record is poor. The bank’s biggest accidents have occurred during his tenure, including the corruption case in Mozambique and the loss of billions with US hedge fund Archegos and Lex Greensill and its supply chain fund. It also kicked a dozen veteran risk managers out of the bank and triggered a devastating brain drain.

The fact that Warner no longer lives in Switzerland does not protect him from Finma access. Where relevant, financial auditors also investigate foreign managers for possible violations of audit law during their stay in Switzerland.

A possible professional ban in Switzerland has no direct impact on other countries. But the financial regulators of the big places work in close cooperation. Someone who fails in one country will likely have a hard time finding another top job in other countries.