Bloomberg
Credit Suisse freezes $ 1 billion in funds as the scandal escalates
(Bloomberg) – Credit Suisse Group AG froze four more funds that invested in the $ 10 billion supply chain financing strategy, adding to the scandal surrounding the bank’s exposure to Lex Greensill’s failed empire. The additional funds have about $ 1.2 billion in assets, some of which they have placed in the four Greensill-linked funds that Credit Suisse is now liquidating. The bank suspended them from March 1, the same day that it froze the supply chain financing strategy. The decision was published in an investor update on its website dated March 9. The largest of the additional funds is the $ 701 million Credit Suisse (Lux) Multi Strategy Bond Fund and the $ 303 million Credit Suisse (Lux) Multi Strategy Alternative Fund. His suspension exacerbates a crisis that forces Credit Suisse to seek outside help to address regulators’ doubts and threatens to overwhelm the bank with the losses of a loan it made months before the collapse of the Greensill empire. For CEO Thomas Gottstein, it is arguably the worst blow to reputation since he took control about a year ago, in the wake of a damaging espionage scandal. – after doubts arose about the valuations of some of the assets, initiating a chain of events that culminated in the collapse of Greensill Capital. The bank considered them a success story until December. Although money pools have returned most of their money, about two-thirds of investors’ money remains tied up. The bank said it was looking for several options to reopen the four additional funds it froze along with the Greensill-linked strategy. The other two funds in this group are Credit Suisse (Lux) Qatar Enhanced Short Duration Fund and Credit Suisse (Lux) Institutional Target Volatility Fund. Credit Suisse initiated an internal investigation into the collapse of the supply chain financing strategy. He temporarily replaced three employees in his asset management unit linked to the funds. Michel Degen, head of asset management in Switzerland and EMEA, is being temporarily replaced by Filippo Rima, according to a person with knowledge of the matter. Luc Mathys, the unit’s head of fixed income, and another manager who managed the funds were also suspended from office, the person said. The Swiss lender is also contacting outside companies to address regulators’ doubts about the collapse. familiar with the matter said, asking for anonymity when discussing internal information. Credit Suisse began to return money from supply chain finance funds to investors. The first payments, totaling just over $ 3 billion, were made to investors earlier this week, according to an investor question and answer session on the bank’s website. The additional profits will be distributed in several installments. Many of the assets in the funds have insurance protection to make them more attractive to investors looking for alternatives to the money markets, but one major insurer – Japan’s Tokio Marine Holdings Inc. – has since questioned the validity of contracts with Greensill Capital . Greensill’s impressive fall in a matter of days began last year, when Tokio Marine’s Bond & Credit Co. unit decided not to renew policies that covered billions of dollars in loans that the supply chain finance firm made. The default protection of about $ 4.6 billion in credit expired this month, after Greensill’s futile effort to obtain an injunction to keep it going, court documents show. In addition to the insurance loss, Credit Suisse also pointed to separate valuation uncertainties for some of the fund holdings. A large part of the assets was initially linked to industrialist Sanjeev Gupta, Bloomberg reported. Gupta’s GFG Alliance is now struggling to negotiate an extension of its debt obligations with Greensill Capital. (Fund value updates, investor update date in the second paragraph and investor Q&A information throughout) For more articles like this, visit us at bloomberg.comSubscribe now to stay up to date with the latest business news source reliable. © 2021 Bloomberg LP