Credit Suisse Group logo in Davos, Switzerland on Monday, January 16, 2023.
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Credit Suisse “seriously breached its supervisory obligations” in the context of its business relationship with financier Lex Greensill and his companies, Swiss regulator FINMA concluded on Tuesday.
After the collapse of the supply chain finance company in early 2021, the exposure of the Swiss lender to London-based Greensil Capital resulted in a large return to investors.
“In its proceedings, FINMA concluded that Credit Suisse Group seriously breached its supervisory duty to adequately identify, limit and monitor the risks underlying the business relationship with Lex Greensill,” the regulator said. “Serious deficiencies in the bank’s organizational structures” during the investigation.
“Furthermore, it did not adequately fulfill its supervisory obligations as an asset manager. FINMA thus concludes that there was a serious breach of Swiss supervisory law.”
Credit Suisse CEO Ulrich Körner welcomed the outcome of the FINMA investigation in a statement on Tuesday.
“This represents an important step towards the final resolution of the SCFF issue. It reinforces many of the findings of the independent review initiated by FINMA’s Board of Review and underlines the importance of the steps we have taken in recent years to strengthen our risk and compliance culture. . We continue to focus on maximizing recovery for financial investors,” He said.
In March 2021, Credit Suisse closed four supply chain finance funds related to greenfield companies at short notice. Funds were distributed to qualified investors with client documentation indicating low risk, and client exposure at closing was approximately $10 billion.
With the collapse of Archigos Capital, Credit Suisse has been a major factor in overhauling its risk management and compliance functions.
From March 2021, Credit Suisse highlighted that senior management changes, regulatory actions and a new global accountability model strengthened controls by increasing governance oversight and moving risk oversight to a dedicated regional risk management function.
FINMA announced on Tuesday that it had ordered corrective measures and opened four enforcement actions against former Credit Suisse managers.
“Going forward, the bank will have to periodically review the most important business relationships (about 500) at the management team level, especially for counterparty risks,” the regulator said.
“Furthermore, the bank must record the responsibilities of its approximately 600 senior staff in the accountability document.”
Credit Suisse noted that all the needs identified by the regulator are being “addressed through institutional measures already being undertaken”.
“FINMA has not ordered any profit forfeiture in connection with the proceedings and the implementation of additional measures is not expected to result in significant costs for Credit Suisse,” the bank added.
Shares of Credit Suisse fell 1.8% in early trading in Europe.