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Doubt on CS's collateral.

 

Credit Suisse
Credit Suisse provided an emergency $140mn loan to Greensill Capital based partly on invoices to companies that deny ever doing the business stated on the documents.

The Swiss bank provided the loan in October 2020, less than five months before the collapse of Greensill, a supply chain finance firm that counted former British prime minister David Cameron as a senior adviser.
Invoices issued by metals magnate Sanjeev Gupta’s Liberty Commodities and sold to Greensill formed part of the collateral for the loan, according to documents seen by the Financial Times and people familiar with the transaction. Yet several of the parties named on the invoices have told the FT they did no business with Liberty.
GFG has consistently denied any wrongdoing.
Credit Suisse’s loan had a clause dictating that the collateral value had to be equal to or greater than the $140mn borrowed. The terms of the debt agreement only allowed invoices on Green-sill’s balance sheet to count towards this tally if the party named on the bill was investment-grade rated.
In the days leading up to Greensill’s collapse, Credit Suisse produced a schedule of receivables dated February 2021, detailing $99mn of these eligible invoices naming 12 different companies.
The FT has seen invoices that Liberty Commodities sold to Greensill naming seven of these same companies. Credit Suisse accepted the bills as collateral even after one of its biggest clients — Swiss commodities trader Trafigura — had warned the bank that Liberty Commodities appeared to have raised financing through Greensill using a suspicious invoice.
The FT revealed last year that Credit Suisse’s Greensill-linked supply chain finance funds contained suspect invoices from Liberty Commodities. It has not been reported previously that the lender’s investment banking division accepted the same bills as collateral for a corporate loan it made to Greensill.
Despite the suspicious collateral, the $140mn loan has since been repaid because Credit Suisse had first-ranking security on other Greensill assets, including $50mn of cash.
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Comments

  1. Simon12 December 2022 at 11:47

    This all goes to show that there are some less than professional people working at CS. If Trafigura had warned them of suspicious activities then why did CS loan all that money?

    ReplyDelete
    Replies
    1. TJ12 December 2022 at 12:50

      Yes or there is someone there (or a few people) that had something to gain from this and not much to lose either way. Unfortunately this happens often where companies go under soon after securing one or more loans.

      Delete

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