Credit Suisse ignored multiple warnings about Greensill before collapse
- Credit Suisse received multiple warnings about its dealings with Greensill starting in 2018.
- Concerns raised included the character judgment of senior managers and the risks involved in their business strategy.
- The collapse of Greensill Capital led to the downfall of Credit Suisse in March 2023.
In Switzerland, Credit Suisse faced serious concerns regarding its association with Greensill Capital as early as 2018. Anonymous messages sent to senior managers at the bank questioned their judgment in dealing with Lex Greensill's firm. These warnings highlighted the risky nature of packaging Greensill's loans into significant funds for wealthy clients and noted a troubling pattern of lending to companies within Sanjeev Gupta's steel empire. Despite these alerts, the bank continued business with Greensill, and additional warnings were documented up until June 2019. The eventual collapse of Greensill in March 2021 came amid a series of escalating regulatory issues, including insurers refusing to extend contracts that supported its loans. This collapse not only led to its own downfall but also hit Credit Suisse hard, contributing to the bank's own failure in March 2023, just a month later. As a 'legacy matter’ from Credit Suisse's history, UBS, which acquired the faltering bank, is now working to recover investments tied to Greensill-backed funds from former investors. Throughout its operation, Greensill attracted significant investment from major players like SoftBank and General Atlantic, which were intended to fund expansion. However, investigations revealed that these funds were mismanaged, being used primarily to repay earlier investors rather than sustainable business practices. The Finma report, which originated from a detailed investigation, pointed out that the plush expenditures at Greensill—such as custom suits and a fleet of business jets—highlighted a disconnect from prudent financial management and oversight. The implications of this mismanagement have been vast, sparking not only financial scandals but also an extensive inquiry by regulators. The anonymous communications received by Credit Suisse seem almost prophetic in hindsight, as they pointed out serious flaws that would later lead to significant financial crises for both the bank and Greensill Capital.