Credit Suisse in 'serious breach' of obligations in Greensill case, Swiss watchdog says

Swiss regulator FINMA concluded on Tuesday that Credit Suisse had "seriously breached its supervisory obligations" in its business relationship with financier Lex Greensill and his company. The Swiss bank's controversial exposure to London-based Greensill Capital led to massive redemptions to investors after the supply chain finance company collapsed in early 2021.

"In the proceedings , FINMA has concluded that Credit Suisse Group has committed serious regulatory breaches. Risks have been properly identified, mitigated and monitored in its business relationship with Lex Greensill over the years," the regulator said, adding that during the investigation, it also found "serious shortcomings in the bank's organizational structure"

This was a serious violation of Swiss surveillance law.

Ulrich Körner, CEO of Credit Suisse, welcomed the findings of the FINMA investigation in a statement on Tuesday. FINMA's review reinforces many of the findings of the independent review launched by the Board of Directors and underscores the importance of the steps we have taken in recent years to strengthen our risk and compliance culture. We also remain focused on achieving maximum recovery for fund investors,” he said.

In March 2021, Credit Suisse temporarily closed four supply chain finance funds linked to Greensill.

The funds were allocated to accredited investors and client documents show low risk, with client exposure of approximately $10 billion at close.

The Greensill incident was the primary cause of Credit Suisse's massive overhaul of its risk management and compliance businesses and the collapse of Archegos Capital.

Credit Suisse pointed out that since March 2021, it has undergone management changes, implemented disciplinary measures and a new global accountability model that strengthens management oversight and increased control.

FINMA announced on Tuesday that it had ordered corrective measures and launched four enforcement proceedings against the former head of Credit Suisse.

"Going forward, banks will need to regularly review the most important business relationships (around 500) at executive committee level, including for counterparty risk," the watchdog said.

"In addition, the bank plans to document the responsibilities of its approximately 600 senior managers in accounting records."

Credit Suisse noted that all requirements identified by the regulator had been "addressed by organizational measures already in place".

“FINMA has not ordered the forfeiture of litigation profits and the implementation of additional measures should not impose significant costs on Credit Suisse,” the bank added.

Credit Suisse shares were down 1.8% at the start of European trading.