The Swiss bank said it will begin skimming excess cash from supply chain funds it co-manages to Greensill, returning it to investors.
The Zurich-based bank is poised to return excess cash to investors from four Greensill co-managed supply chain financing funds, it said in a note on its website on Wednesday. Credit Suisse on Monday wrong-footed investors by locking the four funds, a move which appears to have tipped Greensill into bankruptcy proceedings in the U.K.
«Given the significant amount of cash (and cash equivalents) in the funds, we are exploring mechanisms for distributing excess cash to investors,» Credit Suisse said in the note. Three Luxembourg-based funds and one Liechtenstein vehicle manage a total of $10.1 billion.
Cash Vs Investments
A $700 million investment-grade fund based in Liechtenstein held more than two-thirds of its assets in cash last week, while a similarly-positioned one set up in Luxembourg held 45 percent of its assets in cash or cash equivalent instruments, the bank said.
A high-income supply chain fund is the least liquid, with just 16 percent of its assets as measured last week in cash. Credit Suisse said more than 1,000 clients in total invested in the funds, which were marketed to professional, institutional investors.
«Savior Of Steel» Funding Needs
The Swiss bank didn't elaborate on how or when it would proceed with the fund's other assets. Redemptions are suspended «until further notice,» including pending requests filed before Monday, Credit Suisse said.
The firm was reportedly worried about Greensill's ties to GFG Alliance, run by British billionaire Sanjeev Gupta. Greensill had financed GFG's acquisition spree of distressed industrial assets in the U.K. and Europe, resulting in Gupta's moniker as the «savior of steel».
GFG said it had enough funding to meet its current needs «and its refinancing plans to broaden its capital base and obtain long term funding are progressing well,» according to the «Financial Times» (behind paywall). A Gupta-linked set of instruments was also behind the 2018 suspension of a series of absolute-return funds at GAM, as finews.com reported.
Mid-Way Through Review
On Wednesday, Germany’s financial supervisor, Bafin, filed a criminal complaint against the management of Greensill's bank on suspicion of balance sheet manipulation, the «FT» reported, citing sources. Before the news surfaced, Credit Suisse said it was «currently not aware of evidence» suggesting fraud or financial irregularities in the Greensill paper, or the underlying companies.
The Greensill fund debacle comes one year after Thomas Gottstein took over as CEO of the Swiss firm last February. The Swiss banker put the asset management unit, which sits within a wider private banking unit run by Philipp Wehle, under review some six months ago.
The money-management unit, which has a strong tradition of allowing fund managers to operate as boutiques, doesn't have a specific leader, after Eric Varvel was dispatched back to investment banking 16 months ago. Michel Degen runs the asset management arm in Switzerland as well as Europe.
Writing by Katharina Bart
