Credit Suisse Says It Made $400 Million Greensill Payment

(Bloomberg) -- Credit Suisse Group AG said it made a $400 million payment to investors in its supply-chain finance funds that invested in Greensill products, its fourth such disbursement to clients hit by the liquidation. 

The Aug. 6 payment takes the total paid to investors in the funds to about $5.9 billion, according to an updated Q&A on the bank’s website on Tuesday. The funds’ total cash position is about $7 billion, or about 70% of assets under management when they were suspended, it said.

The collapse of Greensill marked an early reversal in Chief Executive Officer Thomas Gottstein’s tenure, before the bank was hit by the even bigger meltdown at hedge fund client Archegos Capital. After Greensill, Gottstein replaced asset management head Eric Varvel and removed the business from direct oversight of wealth management.

The bank had indicated that it expected to make a fourth payment to Greensill investors at the time of second quarter earnings on July 29.

The bank marketed its popular supply-chain finance funds as among the safest investments it offered, because the loans they held were backed by invoices usually paid in a matter of weeks. But as the funds grew into a $10 billion strategy, they strayed from that pitch and much of the money was lent through Greensill against expected future invoices, for sales that were merely predicted. The business quickly collapsed after Greensill’s loss of trade credit insurance on many of its notes to less credit-worthy borrowers.

Credit Suisse is seeking to recover $2.5 billion of overdue loan payments. Sanjeev Gupta’s GFG Alliance, one of the biggest problem exposures, is in talks for the restructuring and refinancing of assets in the U.S. and the U.K., and there are advanced negotiations for GFG’s Australian businesses, according to the Q&A. 

Earlier this year, the lender filed “winding-up petitions” against a number of companies within the GFG group. An initial hearing over Credit Suisse’s attempt to push them into insolvency has been delayed until next year, allowing Gupta more time to secure financing for his metals empire.

The bank also filed claims in the U.S. bankruptcy process of construction startup Katerra Inc., previously backed by Softbank Group Corp. and started talks to restructure the exposure of U.S. coal miner Bluestone Resources.

The bank also made a first claim on overdue notes which were covered by insurance, and is preparing to make more through Greensill’s banking arm. It estimates $145 million of advisory fees and other recovery costs for this year.

©2021 Bloomberg L.P.