Credit Suisse plans to return more cash this month and recover more assets for investors in supply chain finance funds linked to insolvent finance firm Greensill, the Swiss bank said, aiming to limit damage from risk-management failures.
Switzerland’s second-largest bank last month closed around $10 billion of supply-chain finance funds that bought notes from Greensill. Of this, $3.1 billion has been repaid and $1.5 billion in cash was in the funds as of March 29, leaving more than $5 billion outstanding.
“Over time, we expect the majority part of the funds’ investments to be recovered in the liquidation process, and we have recourse to other measures should they be necessary, including possible legal action,” Credit Suisse said.
“We continue to explore other options for expediting the return of cash to investors,” it added in a notice to investors here dated March 31 and posted on its website.
The bank is facing sharp scrutiny of its ability to manage risk after ructions caused by the Greensill fiasco and its exposure to stricken hedge fund Archegos, which sources say could cost Credit Suisse up to $5 billion.
The bank has not specified potential losses but said they could have a material impact on profits.
Its shares, which had fallen by almost a quarter in the last month as it deals with the fallout, rose around 2%.
Credit Suisse had told investors the debt in a $7.3 billion finance fund linked to Greensill was low risk because it was insured but the bank failed to ensure the policies would pay out, two sources said.
The bank had suspended four other Credit Suisse Asset Management (CSAM) funds that invested in the supply chain finance funds.
To reopen these funds, the illiquid part of their assets will be separated into “side pockets” that will be subsequently liquidated. Subscriptions and redemptions of the original share classes reflecting the liquid part of assets resume on April 7.