<p>Credit
Suisse’s business relationship with financier Lex Greensill and his companies was
the current subject of enforcement proceedings by the Swiss Financial Market
Supervisory Authority, FINMA. The financial watchdog states that the lender
“seriously breached” supervision responsibilities.</p><p>’Greensill’ Proceedings Concluded
by FINMA</p><p>The
controversy over the Swiss bank’s activities seems to be coming in a continuous
stream with no end in sight. <a href=”https://www.financemagnates.com/institutional-forex/credit-suisse-to-pay-495m-settlement-related-to-2008-financial-crisis/” target=”_blank” rel=”follow”>After losing 20% of its assets under management in
2022</a> due to the emergence of a scandal related to the previous decade’s
financial crisis and deepening annual net loss to <a href=”https://www.financemagnates.com/institutional-forex/credit-suisse-reports-chf-73-billion-annual-loss-in-2022/” target=”_blank” rel=”follow”>CHF 7.3 billion</a>, the
institution has found itself the target of a local regulator.</p><p>After its
investigation into Credit Suisse’s dealings with financier Lex Greensill and
his companies, FINMA has determined that the bank seriously violated its
supervisory <a href=”https://www.financemagnates.com/terms/o/obligations/” class=”terms__secondary-term” id=”5dbcbf88-8622-4828-a29c-70a680d32fb5″ target=”_blank”>obligations</a> in terms of appropriate organizational structures and
<a href=”https://www.financemagnates.com/terms/r/risk-management/” class=”terms__main-term” id=”aedb745c-adf9-415f-97e2-ee56a920f0f8″ target=”_blank”>risk management</a>. As a result, FINMA has mandated remedial measures, including
periodic reviews of the bank’s most significant business relationships at the
executive board level (about 500 in total), with a particular focus on
counterparty risks. </p><p>Additionally, the bank
must document the responsibilities of its highest-ranking employees
(approximately 600) in a responsibility document. In addition, FINMA has
initiated four separate enforcement proceedings against former managers of Credit
Suisse.</p><p>”The
business relationship with Greensill was repeatedly discussed at Credit Suisse
management level. However, this was usually only done selectively because of a
specific event or request. There was a lack of an overall view as well as
regular, consistent engagement with the risks associated with Greensill at the
highest level,” FINMA <a href=”https://www.finma.ch/en/news/2023/02/20230228-mm-greensill/” target=”_blank” rel=”nofollow”>commented</a>.</p><p>The Backstory of Credit
Suisse and Greensill Partnership</p><p><a href=”https://www.financemagnates.com/tag/credit-suisse/” target=”_blank” rel=”follow”>Credit
Suisse</a> closed four funds in March 2021 that were linked to companies owned by
financier Lex Greensill. The closure, which was sudden, affected qualified
investors who were informed that the risk associated with these funds was low. These
funds, in the area of supply chain finance, were initially launched in 2017. </p><p>Clients had
invested approximately $10 billion in these funds before their closure. In
response, FINMA implemented risk-mitigating measures and launched enforcement
proceedings to investigate whether Credit Suisse had breached Swiss supervisory
laws with regard to Greensill’s business relationships.</p><p>The media
hype surrounding the funds began in 2018, with members of the media and FINMA
approaching the bank with a number of significant questions about the Greensiil
relationship. FINMA found that the bank used employees responsible for business
relations with Greensill to address critical questions and warnings. </p><p>”Credit
Suisse even repeatedly asked Lex Greensill himself and relied on his answers
for its own statements. For these reasons, the bank made partly false and
overly positive statements to FINMA about the claims selection process and the
funds’ exposure to certain debtors,” FINMA added.</p><p>FINMA’s
investigation determined that Credit Suisse Group had violated its supervisory
responsibilities significantly, which included effectively identifying,
mitigating, and monitoring risks relating to its business relationship with Greensill
for several years. </p><p>This is
another FINMA investigation of Credit Suisse in recent years. In 2021, the
financial regulator discovered that the bank <a href=”https://www.financemagnates.com/institutional-forex/credit-suisse-spied-on-7-executives-finma/” target=”_blank” rel=”follow”>ran at least seven surveillance
campaigns</a> on top executives. The market watchdog stated that the bank’s senior management was aware of some of the surveillance activities, contradicting the bank’s previous assertion that rogue employees spied on the members of the executive board.</p>
This article was written by Damian Chmiel at www.financemagnates.com.
