Credit Suisse is poised to act on controversial ties between one of its supply chain funds, Softbank, and the Japanese firm’s billionaire founder Masayoshi Son. The retreat illustrates the perils of «one-bank» wealth managers.
The Zurich-based bank is preparing to unwind a Softbank investment in an asset management fund it operates jointly with the U.K.’s Greensill and, a person familiar with the matter told finews.com on Wednesday. The Swiss bank is examining «certain aspects of the matter» in a review, it said earlier.
Specifically, the Japanese conglomerate’s Vision Fund is expected to withdraw its investment Swiss bank’s supply chain funds in coming weeks, the person said. The move follows scrutiny of the asset management product, a roughly $7.5 billion fund to capture «reverse factoring» flows.
Super-Rich, Trading-Hungry
It emerged last week that Softbank invested in the Credit Suisse funds, which in turn filliped start-ups in its own Vision funds. This circular relationship wasn’t proactively disclosed to other investors in the Credit Suisse funds. Softbank didn’t respond to a request for comment on if it is unwinding from the Credit Suisse fund.
The ties represent one of several between the two parties: Softbank founder Masayoshi Son reportedly borrowed from Credit Suisse’s private banking arm to pour more money into the Vision funds, the «Financial Times» (behind paywall) reported in April. Reportedly worth more than $26 billion, Son is precisely the type of super-rich, transaction-hungry client that the Swiss bank is keen to woo.
The clash of interests within Credit Suisse alone makes clear the pitfalls of «one-bank,» its strategy to put more of the bank's business at the disposal of its wealthiest clients. Son reportedly also drew loans from Julius Baer, J. Safra Sarasin, Liechtenstein’s LGT Bank, and Japan's Mizuho.
Uncomfortable Ties
Credit Suisse's asset management arm is now reviewing legal aspects and documents around the uncomfortable cross-ties that have surfaced publicly in the three-year-old supply chain product with Greensill. The U.K. specialty finance firm emerged at the center of a scandal at Swiss asset manager GAM in 2018.
That relationship was disastrous for GAM, which long maintained a huge concentration of investments with Greensill and counterparties tied to the firm. Greensill has drawn controversy amid the pandemic crisis, with critics arguing supply chain finance can mask risks on companies’ balance sheets.
