FINMA Concludes Proceedings in $10b 'Greensill' Case against Credit Suisse

by Damian Chmiel
  • The Swiss regulator investigated the lender's relationship with Lex Greensill and his funds.
  • The funds were launched in 2017 and closed four years later.
credit suisse

Credit Suisse's business relationship with financier Lex Greensill and his companies was the current subject of enforcement proceedings by the Swiss Financial Market Supervisory Authority, FINMA. The financial watchdog states that the lender "seriously breached" supervision responsibilities.

'Greensill' Proceedings Concluded by FINMA

The controversy over the Swiss bank's activities seems to be coming in a continuous stream with no end in sight. After losing 20% of its assets under management in 2022 due to the emergence of a scandal related to the previous decade's financial crisis and deepening annual net loss to CHF 7.3 billion, the institution has found itself the target of a local regulator.

After its investigation into Credit Suisse's dealings with financier Lex Greensill and his companies, FINMA has determined that the bank seriously violated its supervisory obligations in terms of appropriate organizational structures and risk management . As a result, FINMA has mandated remedial measures, including periodic reviews of the bank's most significant business relationships at the executive board level (about 500 in total), with a particular focus on counterparty risks.

Additionally, the bank must document the responsibilities of its highest-ranking employees (approximately 600) in a responsibility document. In addition, FINMA has initiated four separate enforcement proceedings against former managers of Credit Suisse.

"The business relationship with Greensill was repeatedly discussed at Credit Suisse management level. However, this was usually only done selectively because of a specific event or request. There was a lack of an overall view as well as regular, consistent engagement with the risks associated with Greensill at the highest level," FINMA commented.

The Backstory of Credit Suisse and Greensill Partnership

Credit Suisse closed four funds in March 2021 that were linked to companies owned by financier Lex Greensill. The closure, which was sudden, affected qualified investors who were informed that the risk associated with these funds was low. These funds, in the area of supply chain finance, were initially launched in 2017.

Clients had invested approximately $10 billion in these funds before their closure. In response, FINMA implemented risk-mitigating measures and launched enforcement proceedings to investigate whether Credit Suisse had breached Swiss supervisory laws with regard to Greensill's business relationships.

The media hype surrounding the funds began in 2018, with members of the media and FINMA approaching the bank with a number of significant questions about the Greensiil relationship. FINMA found that the bank used employees responsible for business relations with Greensill to address critical questions and warnings.

"Credit Suisse even repeatedly asked Lex Greensill himself and relied on his answers for its own statements. For these reasons, the bank made partly false and overly positive statements to FINMA about the claims selection process and the funds' exposure to certain debtors," FINMA added.

FINMA's investigation determined that Credit Suisse Group had violated its supervisory responsibilities significantly, which included effectively identifying, mitigating, and monitoring risks relating to its business relationship with Greensill for several years.

This is another FINMA investigation of Credit Suisse in recent years. In 2021, the financial regulator discovered that the bank ran at least seven surveillance campaigns on top executives. The market watchdog stated that the bank's senior management was aware of some of the surveillance activities, contradicting the bank's previous assertion that rogue employees spied on the members of the executive board.

Credit Suisse's business relationship with financier Lex Greensill and his companies was the current subject of enforcement proceedings by the Swiss Financial Market Supervisory Authority, FINMA. The financial watchdog states that the lender "seriously breached" supervision responsibilities.

'Greensill' Proceedings Concluded by FINMA

The controversy over the Swiss bank's activities seems to be coming in a continuous stream with no end in sight. After losing 20% of its assets under management in 2022 due to the emergence of a scandal related to the previous decade's financial crisis and deepening annual net loss to CHF 7.3 billion, the institution has found itself the target of a local regulator.

After its investigation into Credit Suisse's dealings with financier Lex Greensill and his companies, FINMA has determined that the bank seriously violated its supervisory obligations in terms of appropriate organizational structures and risk management . As a result, FINMA has mandated remedial measures, including periodic reviews of the bank's most significant business relationships at the executive board level (about 500 in total), with a particular focus on counterparty risks.

Additionally, the bank must document the responsibilities of its highest-ranking employees (approximately 600) in a responsibility document. In addition, FINMA has initiated four separate enforcement proceedings against former managers of Credit Suisse.

"The business relationship with Greensill was repeatedly discussed at Credit Suisse management level. However, this was usually only done selectively because of a specific event or request. There was a lack of an overall view as well as regular, consistent engagement with the risks associated with Greensill at the highest level," FINMA commented.

The Backstory of Credit Suisse and Greensill Partnership

Credit Suisse closed four funds in March 2021 that were linked to companies owned by financier Lex Greensill. The closure, which was sudden, affected qualified investors who were informed that the risk associated with these funds was low. These funds, in the area of supply chain finance, were initially launched in 2017.

Clients had invested approximately $10 billion in these funds before their closure. In response, FINMA implemented risk-mitigating measures and launched enforcement proceedings to investigate whether Credit Suisse had breached Swiss supervisory laws with regard to Greensill's business relationships.

The media hype surrounding the funds began in 2018, with members of the media and FINMA approaching the bank with a number of significant questions about the Greensiil relationship. FINMA found that the bank used employees responsible for business relations with Greensill to address critical questions and warnings.

"Credit Suisse even repeatedly asked Lex Greensill himself and relied on his answers for its own statements. For these reasons, the bank made partly false and overly positive statements to FINMA about the claims selection process and the funds' exposure to certain debtors," FINMA added.

FINMA's investigation determined that Credit Suisse Group had violated its supervisory responsibilities significantly, which included effectively identifying, mitigating, and monitoring risks relating to its business relationship with Greensill for several years.

This is another FINMA investigation of Credit Suisse in recent years. In 2021, the financial regulator discovered that the bank ran at least seven surveillance campaigns on top executives. The market watchdog stated that the bank's senior management was aware of some of the surveillance activities, contradicting the bank's previous assertion that rogue employees spied on the members of the executive board.

About the Author: Damian Chmiel
Damian Chmiel
  • 1462 Articles
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About the Author: Damian Chmiel
Damian's adventure with financial markets began at the Cracow University of Economics, where he obtained his MA in finance and accounting. Starting from the retail trader perspective, he collaborated with brokerage houses and financial portals in Poland as an independent editor and content manager. His adventure with Finance Magnates began in 2016, where he is working as a business intelligence analyst.
  • 1462 Articles
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