Credit Suisse’s Varvel Leaves Bank After Greensill Scandal

(Bloomberg) -- Credit Suisse Group AG’s former asset management head Eric Varvel is leaving in the bank’s latest high-level departure after a year of scandal and huge financial losses.

Varvel, a three-decade veteran of the Zurich-based firm, had already given up much of his portfolio this year after the bank was forced to freeze and wind down a $10 billion group of funds linked to failed Greensill Capital.  

The 58-year-old had retained his role as chief executive officer of the lender’s U.S. legal entity and chairman of the investment bank, despite other executives losing their jobs, due to his close ties with to some of the bank’s biggest Qatari clients and biggest shareholders. Ulrich Koerner, a veteran of UBS Group AG and Credit Suisse, was brought in to run asset management in March. 

“I speak for us all when I say we appreciated Eric’s optimism, his leadership and his winning attitude,” Credit Suisse CEO Thomas Gottstein said in a memo announcing the departure. “He has developed remarkably durable and deep relationships with colleagues and clients alike.”

Varvel, an American, had been a proponent of the Greensill-linked funds and a disproportionate amount of the money in them -- more than $1 billion -- was sold through Credit Suisse’s private banking arm in the Middle East, people familiar with the matter told Bloomberg in March. 

The Greensill-linked funds initially invested in loans backed by invoices that would be paid in a matter of weeks or months, making them relatively safe. But as they grew in size, they strayed from that pitch and much of the money was lent against expected future invoices, for sales that were merely predicted. Credit Suisse was ultimately forced to freeze the funds after a major insurer of the assets refused to continue coverage.

Credit Suisse said earlier this month that Christian Meissner would take over as CEO for the U.S. in addition to his role as head of the investment bank, among other regional and divisional appointments. It also returned another $400 million to investors of the Greensill-linked funds, bringing the total repaid to $6.7 billion. There’s still some uncertainty about how much of the remainder investors will receive, and when they will get it.

The Greensill scandal was quickly followed by the meltdown of U.S. family office Archegos Capital Management, which hit Credit Suisse harder than any other bank after it took a hit of about $5.5 billion. In the aftermath, the bank undertook a further purge of senior management involved in the scandal, including risk head Lara Warner and investment banking head Brian Chin. Since then, new chairman Antonio Horta-Osorio has been trying to instill stability at the bank.

Varvel’s departure relates to a disagreement with Horta-Osorio over the latter’s style and strategy for the bank, the Financial Times reported on this month, citing unidentified people familiar with the matter. 

Varvel pursued a “barbell strategy” of focusing on alternative investments on the one hand, and cheaper, passive instruments on the other. While he was able to boost assets under management, the unit hit the spotlight for the wrong reasons before he was replaced. On top of the issues with the Greensill-linked funds, setbacks included an impairment on a stake in York Capital Management.

©2021 Bloomberg L.P.