Behind Greensill’s Collapse: Detour Into Risky Loans

Link: https://www.wsj.com/articles/behind-greensills-collapse-detour-into-risky-loans-11615611953

Excerpt:

Behind Mr. Greensill’s failure: The business went beyond the scope of what it initially set out to do. Many of Greensill’s loans went to a small circle of borrowers close to Mr. Greensill, as well as acquaintances and his biggest outside backers.

A Wall Street Journal review of internal Greensill records, including board minutes and emails, along with interviews with more than a dozen people familiar with Greensill’s business, reveals how the company obscured its riskier loans behind a safe but barely profitable supply-chain finance business.

Greensill took on bigger, riskier long-term loans. In some cases, the loans were given other names before they were sold on to investors in the Credit Suisse funds, obscuring who the borrower was or the type of loan, the Journal found.

Author(s): Duncan Mavin, Julie Steinberg

Publication Date: 13 March 2021

Publication Site: Wall Street Journal

Greensill Capital Tumbles Into Insolvency, Spreading Financial Pain

Link: https://www.wsj.com/articles/greensill-capital-tumbles-into-insolvency-spreading-financial-pain-11615216346

Excerpt:

Greensill Capital filed for insolvency protection Monday, days after regulators took over its banking unit and Credit Suisse Group AG froze investment funds that were critical to the startup’s operations.

The unwinding has rippled to holders of the Credit Suisse funds, German municipalities that deposited money with Greensill’s bank, and a high-profile duo of venture-capital investors.

Greensill specialized in supply-chain finance, a type of short-term cash advance to companies to stretch out the time they have to pay their bills. The firm was once worth $4 billion based on investments from SoftBank Group Corp.’s Vision Fund. The collapse marks a high-profile blow for the mammoth Japanese investor.

Author(s): Julie Steinberg, Duncan Mavin, Patricia Kowsmann

Publication Date: 8 March 2021

Publication Site: Wall Street Journal

Greensill Faces Possible Insolvency After Credit Suisse Suspends Investment Funds

Link: https://www.wsj.com/articles/credit-suisse-suspends-funds-tied-to-softbank-backed-greensill-11614599752

Excerpt:

Specialty finance firm Greensill Capital headed toward a rapid unraveling after Credit Suisse Group AG suspended $10 billion of investment funds that fueled the SoftBank Group Corp.-backed startup.

With a key source of financing frozen, Greensill appointed Grant Thornton to guide it through a possible restructuring, and it could file for insolvency, the U.K. equivalent of bankruptcy, within days, according to people familiar with the company.

….

U.K.-based Greensill is the brainchild of former Citigroup Inc. and Morgan Stanley financier Lex Greensill. Founded in 2011, Greensill specializes in an area known as supply-chain finance, a form of short-term cash advance that lets companies stretch out the time they have to pay their bills.

Greensill packages those cash advances into bondlike securities that give investors a higher return than they could get from bank deposits. Credit Suisse’s funds were a major buyer of those securities.

Author(s): Julie Steinberg, Duncan Mavin, Ben Dummett, Maureen Farrell

Publication Date: 1 March 2021

Publication Site: Wall Street Journal

Credit Suisse Was Alerted to Private Banker’s Misconduct Years Before Criminal Charges

Link: https://www.wsj.com/articles/credit-suisse-was-alerted-to-private-bankers-misconduct-years-before-criminal-charges-11612462705

Excerpt:

Credit Suisse Group AG overlooked red flags for years while a rogue private banker stole from billionaire clients, according to a report by a law firm for Switzerland’s financial regulator.

The private banker, Patrice Lescaudron, was sentenced to five years in prison in 2018 for fraud and forgery. He admitted cutting and pasting client signatures to divert money and make stock bets without their knowledge, causing more than $150 million in losses, according to the Geneva criminal court.

The regulator, Finma, publicly censured Credit Suisse in 2018 for inadequately supervising and disciplining Mr. Lescaudron as a top earner, and said he had repeatedly broken internal rules, but it revealed little else about the bank’s actions in the matter. Credit Suisse said it discovered Mr. Lescaudron’s fraud in September 2015 when a stock he had bought for clients crashed.

Author: Margot Patrick

Publication Date: 5 February 2021

Publication Site: Wall Street Journal