The billion-dollar bankruptcies of Greensill and Archegos in the spring of 2021 symbolize the inadequate risk culture within Credit Suisse. When Anglo-Australian financial services provider Greensill Capital goes bankrupt, CS is forced to freeze four funds worth ten billion francs. A few weeks later, U.S. asset manager Archegos Capital speculated, inflicting a $5 billion loss on CS.
That was almost two years ago. The second-largest Swiss bank has since changed its president and CEO and announced a new strategy twice. Yet the Greensill scandal hit the bank again on Monday morning. The reason is research by the British Financial Times.
CS granted Greensill a $140 million emergency loan in October 2020, less than five months before the collapse. Spicy: The collateral for this was based in part on invoices from companies that declared they had never done business with Greensill.
Is collateral just castles in the air?
According to documents obtained by the Financial Times, the invoices were issued by Liberty Commodities and sold to Greensill. British authorities and French police are investigating the company on suspicion of fraud and money laundering.
A few days before Greensill’s bankruptcy, CS filed a statement of claim listing eligible invoices of $99 million from 12 different companies in February 2021. Seven of these companies are mentioned in the documents obtained by the British newspaper. But at least four companies have confirmed to the Financial Times that they have not made any deals with Liberty Commodities.
CS received $140 million
In the end, Credit Suisse didn’t take revenge on the fact that the securities were probably just castles in the air. The $140 million loan was eventually repaid, presumably because CS had primary collateral over Greensill’s other assets, including $50 million in cash.
“Credit Suisse Asset Management has worked tirelessly to give cash back to investors in supply chain finance funds,” the Swiss bank said. “The full repayment of the Greensill Capital bridge loan plus the interest owed is further proof of our absolute commitment to recourse to this matter wherever possible.” (no)