The Swiss bank's boss publicly addressed the burgeoning scandal over a $10.1 billion fund line it operated with the insolvent U.K. specialist financier for the first time.
With CEO Thomas Gottstein due to face investors at an annual brokerage conference on Tuesday, Credit Suisse issued a trading statement which also addressed the fallout from a line of supply chain funds the Swiss wealth manager operated with Greensill Capital.
The bank pulled the plug on $10.1 billion funds two weeks ago, a move which sparked a series of events including Greensill applying for U.K. insolvency last week. Credit Suisse has various touch-points with the boutique as well as its founder-CEO, Lex Greensill.
On Tuesday, the Swiss bank said in a statement it would keep returning investor money from the four funds in coming weeks, after returning $3.1 billion last week – this represents the cash portion of the products which Credit Suisse pledged to return quickly.
Loan Partially Repaid
The Zurich-based bank also lent $140 million to Greensill Capital last year, to tide the company over until a now-moot public listing. Greensill's administrators have returned $50 million recently, Credit Suisse said, and the sum outstanding on the collateralized loan is now $90 million.
«While these issues are still at an early stage, we would note that it is possible that Credit Suisse will incur a charge in respect of these matters,» the bank said.
The fund implosion is complicated for the bank of the relationship it maintained with Lex Greensill himself – the kind of wealthy private client most Swiss banks hunt. Credit Suisse investment bank was also reportedly lined up for a Greensill initial public offering this year – besides the asset management ties.
Bumper 2021 Revenue
Gottstein, Credit Suisse's CEO, also said the bank's strong start into 2021 had continued through March. Revenue at its investment banking arm is up more by more than half on the year, thanks to in capital markets issuing and sales and trading, he said.
Its business with wealthy clients, which is spread over Swiss, international, and Asia units, is also doing well. Gottstein singled out growth in a global trading solutions unit which links up clients with sophisticated products, as well as Asia-Pacific. Credit losses remain «benign,» he noted.
