Credit Suisse cuts off Greensill Capital heading for possible insolvency
The “very strong relationship” between Greensill Capital and Credit Suisse was probably not as solid as the fintech said just six months ago. The Swiss bank announced yesterday in a press release that it was suspending subscriptions and redemptions from all funds whose assets were originated and structured by Greensill Capital. These funds totalled about €10bn. Credit Suisse explained the suspension by the fact that some of the funds’ assets are “currently subject to considerable uncertainties with respect to their accurate valuation.”
This decision is not good news for Greensill, a prestigious fintech whose advisors include, in addition to its founder, Lex Greensill, who holds the Order of the British Empire; the former British prime minister David Cameron; Julie Bishop, the former Australian foreign minister; and a former Citi banker, Maurice Thompson, the firm’s president. Portraits of all these persons were taken off Greensill’s website yesterday.
Insolvency is possible
For several months now, Greensill, in which Softbank has invested a total of $1.5bn – thus valuing it at $3.5bn – has been laid low by many problems. The Financial Times reported in May 2020 that Greensill-managed funds had suffered a wave of defaults and that the firm had to call for help from Softbank. According to several media sources, including Bloomberg, Softbank in December wrote down its Greensill to almost zero. The Wall Street Journal, meanwhile, reported that the fintech had appointed Grant Thornton to advise it on a possible restructuring or even bankruptcy proceedings in the coming days.
The distancing by Credit Suisse, which in June 2020 had already undertaken a review of Greensill funds but without suspending them, could mean the end of the fintech, especially as in August, BaFin, the German markets supervisory, had asked Greensill to reduce its exposure to one of its clients, the Indian businessman Sanjeev Gupta. This warning, the Financial Times reported, convinced Apollo to give up its plans to take Greensill over.