Credit Suisse breached supervisory law over $10bn Greensill funds

The Swiss financial regulator has concluded its two-year investigation into Credit Suisse’s failings over the collapse of specialist finance firm Greensill Capital, finding there had been a “serious breach of Swiss supervisory law”.

The implosion of Greensill in March 2021 caused Credit Suisse to suspend and close $10bn worth of funds that had lent money via the supply-chain finance business, trapping the savings of 1,000 of the Swiss bank’s most prized clients.

Credit Suisse is in the middle of a fraught and expensive operation to reclaim the funds for its clients through insurance claims and lawsuits, which is expected to continue for several years. So far, it has managed to recoup $7.4bn of the $10bn invested in the funds, though the final portion is proving the hardest to recover.

Greensill was run by former watermelon farmer Lex Greensill and advised by former UK prime minister David Cameron.

In a statement on Tuesday, Finma, the Swiss regulator, said that the Swiss bank had failed to “adequately identify, limit and monitor risks in the context of the business relationship with Lex Greensill over a period of years.” As a result, “FINMA thus concludes that there has been a serious breach of Swiss supervisory law,” it added.

The regulator does not have the power to fine companies within its remit, but it can ban individuals from acting in a senior role at an institution it supervises.

It said it had opened four enforcement proceedings against former Credit Suisse managers but would not comment further on them or reveal their identities. It did not publish its full report into the matter.

“In its proceedings, Finma concluded that Credit Suisse Group seriously breached its supervisory duty to adequately identify, limit and monitor risks in the context of the business relationship with Lex Greensill over a period of years,” the regulator said.

“Finma also found serious deficiencies in the bank’s organisational structures during the period under investigation. Furthermore, it did not sufficiently fulfil its supervisory duties as an asset manager.”

Credit Suisse carried out its own report into its failings over Greensill but did not release it.

Ulrich Körner, the bank’s chief executive, said on Tuesday that the conclusion of the Finma investigation marked an important step in the resolution of the matter.

“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,” he said. “We also continue to focus on maximising recovery for fund investors.”