The brand of Credit Suisse Group in Davos, Switzerland, on Monday, Jan. 16, 2023.
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Credit Suisse “seriously breached its supervisory obligations” within the context of its business relationship with financier Lex Greensill and his corporations, Swiss regulator FINMA concluded Tuesday.
The embattled Swiss lender’s exposure to the London-based Greensill Capital resulted in massive reimbursements to investors after the provision chain finance firm collapsed in early 2021.
“In its proceedings, FINMA concluded that Credit Suisse Group seriously breached its supervisory duty to adequately discover, limit and monitor risks within the context of the business relationship with Lex Greensill over a period of years,” the regulator said, adding that it also found “serious deficiencies within the bank’s organisational structures” throughout the period under investigation.
“Moreover, it didn’t sufficiently fulfil its supervisory duties as an asset manager. FINMA thus concludes that there was a serious breach of Swiss supervisory law.”
Credit Suisse CEO Ulrich Körner welcomed the conclusion of the FINMA investigation in an announcement Tuesday.
“This marks a crucial step towards the ultimate resolution of the SCFF issue. FINMA’s review has reinforced most of the findings of the Board-initiated independent review and underlines the importance of the actions now we have taken in recent times to strengthen our Risk and Compliance culture. We also proceed to deal with maximizing recovery for fund investors,” he said.
In March 2021, Credit Suisse closed 4 supply chain finance funds at short notice related to Greensill corporations. The funds were distributed to qualified investors with client documentation indicating low risk, and client exposure sat at around $10 billion on the time of the closure.
The Greensill saga was a key reason behind Credit Suisse’s massive overhaul of its risk management and compliance operations, alongside the collapse of Archegos Capital.
Credit Suisse highlighted that, since March 2021, it has undergone senior management changes, implemented disciplinary measures and a latest global accountability model, increased governance oversight and strengthened controls by moving risk oversight right into a dedicated divisional risk management function.
FINMA announced Tuesday that it has ordered remedial measures and opened 4 enforcement proceedings against former Credit Suisse managers.
“In future, the bank could have to periodically review at executive board level a very powerful business relationships (around 500) specifically for counterparty risks,” the regulator said.
“As well as, the bank is required to record the responsibilities of its roughly 600 highest-ranking employees in a responsibility document.”
Credit Suisse noted that every one of the necessities identified by the regulator “are being addressed through the organizational measures already underway.”
“FINMA has not ordered any confiscation of profits in reference to the proceedings and the implementation of the extra measures will not be expected to end in significant costs for Credit Suisse,” the bank added.
Credit Suisse shares fell 1.8% during early trade in Europe.
