UBS offers to return money in Credit Suisse funds tied to Greensill Capital

By Louis Goss

UBS on Monday offered to return the vast majority of investments put into a group of Credit Suisse funds that were hit by the collapse of the scandal-ridden financier Greensill Capital in 2021, as the Swiss banking giant seeks to resolve legacy issues deriving from its acquisition of its main domestic rival last year.

In a statement, UBS outlined an offer that would see it give back 90% of any money put into the Credit Suisse Supply Chain Finance Funds that had $10 billion invested in Greensill Capital funds before the London firm filed for bankruptcy three years ago.

In its last annual report, Credit Suisse said it had returned $7.4 billion to investors.

The Swiss bank said it expects to pay out around $900 million in relation to the offer, which is aimed at resolving the years-long saga that was sparked by Greensill's insolvency and which contributed to Credit Suisse's own near collapse in March last year.

"The offer aims to give fund investors certainty, an accelerated exit from their positions and a high level of financial recovery," UBS said in a statement published on Monday. "It will allow an early exit from fund investments compared to distributions under the ongoing recovery process."

Shares in UBS (CH:UBSG) (UBS), listed on the SIX Swiss Exchange in Zurich, increased 1% on Monday having gained 47% over the previous 12 months.

Greensill Capital was a London headquartered firm started by Australian financier Lex Greensill that was a major lender to Sanjeev Gupta's GFG Alliance.

Greensill offered what are called supply-chain funds via Credit Suisse. The financing is meant to be low risk, where a financing company immediately pays out a seller's claim, at a discount, and then collects on the claim from the buyer. Greensill securitized these claims and passed them onto four Credit Suisse funds.

While the Greensill funds securitized claims from low-risk companies including Ford and Vodafone, it also dealt with claims from higher-risk companies such as GFG.

In the wake of Greensill's collapse in 2021, former U.K. Prime Minister David Cameron was revealed to have lobbied the U.K. government to let the financier access state-backed emergency COVID-19 loans, including by sending text messages to Rishi Sunak, who was then chancellor of the exchequer.

UBS acquired Credit Suisse through a 3 billion Swiss francs ($3.4 billion) state-backed acquisition in March last year that saved the Swiss bank from the brink of bankruptcy caused by a run on its reserves.

- Steve Goldstein contributed to this report

-Louis Goss

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06-17-24 0514ET

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