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Credit Suisse slammed for ‘serious breaches’ in Greensill debacle

Credit Suisse
Credit Suisse booked a CHF7.3 billion loss in 2022 following a series of trading, legal and reputational issues. Keystone-sda-ats Ag Switzerland

The Swiss financial regulator has ordered Credit Suisse to overhaul its risk management after finding the bank “seriously breached its supervisory obligations” in its dealings with the collapsed Greensill Capital.

Credit Suisse made “partly false and overly optimistic” statements to the Swiss Financial Market Supervisory Authority (FINMA) regarding its exposure to Greensill, the regulator said on Tuesday.

+ Where did it all go wrong for Credit Suisse?

And on one occasion, a senior manager at the bank over-ruled the concerns of an internal risk manager who had pointed out red flags.

Credit Suisse launched four funds from 2017 to invest $10 billion (CHF9.4 billion) of client money in the supply chain financing company Greensill.

Greensill went bankrupt in 2021 and Credit Suisse has so far only been able to recover $7.4 billion of its these assets.

On Tuesday, FINMA published its findings of an investigation into the matter. The report also criticised the bank for allowing a conflict of interest as it also supplied Greensill with loans.

+ How Credit Suisse plans to revive its fortunes

Credit Suisse has been ordered to conduct enhanced risk management on its top 500 business relationships and continuous due diligence of its 600 highest-ranking employees.

In addition, FINMA has started enforcement proceedings against four former Credit Suisse managers that could lead to them being banned from working in the Swiss financial sector for up to five years.

Credit Suisse acknowledged the FINMA report on Tuesday, stating that it has already fired several managers and other staff and has overhauled its risk management procedures.

The bank is currently undergoing a significant strategic overhaul in an effort to revive its ailing performance.

Credit Suisse booked a CHF7.3 billion loss in 2022 following a series of trading, legal and reputational  problems.

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