The Swiss bank used a series of Greensill co-managed supply chain funds more widely in its asset management unit, finews.asia has learned. 

The Zurich-based bank on Monday gated four funds it manages together with Greensill, a U.K. specialist financier which is reportedly preparing for administration. The move freezes $10.1 billion in assets, aside from some cash which the bank said it plans to disperse.

However, Credit Suisse used the controversial supply chain funds more widely than known until now: finews found five sub-funds of a multi-strategy fund which in turn held the supply chain products as an asset, as of October 31, 2019. The bank has not until now gated any of these so-called sub-funds with the Greensill funds.

Pervasive Greensill Ties

The amount of supply-chain in sub-funds ranges from marginal – 1.6 million euros ($1.9 million) worth in an institutional target volatility product – to up to more than 15 percent of its assets, or $33.9 million, in the case of a multi-strategy alternative fund.

The total exposure in the sub-funds – roughly $110 million – pales in comparison to the four funds it gated on Monday, but speaks to how pervasively the Swiss bank did business with Greensill. In 2018, when Credit Suisse had raised $2 billion in supply chain funds, the bank called it «a very interesting cash alternative for our clients» with high-quality underlying borrowers.

Widely-Touted Strategy

Credit Suisse was still touting supply chain finance as recently as three months ago, when it featured prominently as an«innovative, higher-margin offering» in a presentation by Eric Varvel to investors. The bank didn't immediately respond to a request for comment.

Credit Suisse sold the funds to more than 1,000 so-called qualified investors, including insurers and pension funds, as well as wealthy clients at its private bank, according to «The Wall Street Journal» (behind paywall). The U.S. outlet reported that the Swiss bank had conceived a safety net by restricting how much one provider could insure the funds’ assets – but failed to implement.

The fund debacle has wide-ranging implications for Credit Suisse, which has long, deep ties both to Greensill Capital as well as the firm’s founder, Lex Greensill. The wealth manager granted the firm an $140 million bridge loan last year, was lined up as a book-runner on a planned initial public offering this year, and reportedly catered to Lex Greensill as a private client as well.

 Samuel Gerber contributed reporting