Credit Suisse Probe Examines Role of CEO, Executives
(Bloomberg) -- Credit Suisse Group AG is examining the role of executive board members including Chief Executive Officer Thomas Gottstein as part of its probe into dealings with failed startup lender Greensill Capital, according to people with knowledge of the matter.
Directors are reviewing the way in which supply chain finance funds were sold to investors, including its own wealth management clients, and how the bank managed conflicts of interest and a business relationship with Lex Greensill that spanned three divisions, one of the people said. The bank has reactivated a special crisis committee -- led by chairman Urs Rohner and the heads of the audit and risk committees -- to oversee the issues surrounding Greensill, according to its annual report.
The Swiss bank is contending with the worst crisis since a spying scandal a year ago, after it was forced to suspend $10 billion of supply-chain finance funds managed with Greensill over concerns about their valuation. As the fallout deepens, the bank is grappling with litigation threats from investors, potential financial losses and regulatory scrutiny. Earlier this month, the bank replaced asset management head Eric Varvel with ex-UBS Group AG executive Ulrich Koerner.
A spokesman for the bank declined to comment.
Executives are cooperating with investigators and there’s so far no evidence to suggest Gottstein took actions that would threaten his position, one of the people said. Still, the board is concerned about the potential losses in the funds and consequences, including the threat of being sued by investors, the person said.
Credit Suisse shares gained 0.4% as of 4:38 p.m. in Zurich and are up about 7.7% this year so far.
Clients from rich individuals in the Middle East to Swiss pension funds have been expressing their anger over potential investment losses, threatening key relationships far beyond the asset management business. In addition to replacing Varvel, Credit Suisse last week said it has suspended some senior staff bonuses.
The funds offered were touted as among the safest going. But they contained investments tied to future sales of Greensill’s borrowers, way beyond the traditional preserve of supply-chain finance. Investors face losses as those funds are liquidated.
The board’s investigation will determine whether there were shortcomings in defense lines, but it is too early to talk about what the results might be, or who else could be held responsible after Varvel’s replacement, Gottstein said in an interview with Bloomberg Television that aired earlier this week.
“I am actually quite confident that we will come out stronger from this episode,” he said. “It is a learning process.”
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