Credit Suisse angers Greensill investors with free services offer

Credit Suisse clients suing the bank over the collapse of its Greensill-linked supply-chain finance funds seven months ago have responded angrily to its offer of free services.

The Swiss lender has begun contacting the more than 1,000 wealthy clients who invested in the $10bn group of funds, offering refunds on fees from brokerage, discretionary mandate and banking services, as well as investment advice.

Those who have initiated legal proceedings against the bank will not be offered the rebates, but they may be eligible if they drop their claims, said a person briefed on the offer.

“Why are they trying to offer this to clients months after the funds collapsed?” asked one individual who invested several million dollars in the funds. “This should have been one of the first steps they took in the early weeks of the crisis.”

The investor said it was “out of the question” that he would drop his litigation in return for the free services, adding: “On a moral basis, this is about more than just me getting the money back. It demonstrates how banks work and that they need to change.”

Another investor said: “This seems like a too-clever way of circumventing treating all investors in the vehicles equally.”

Hundreds of Credit Suisse clients invested in the supply-chain funds, having been told by the bank’s advisers and marketing material that they were investing in low-risk products, fully insured against losses.

In March, the Swiss lender suspended the $10bn suite of funds linked to Greensill Capital, which collapsed into administration amid allegations of fraud against Greensill. While about $7bn has been collected so far, the bank has warned that about $2.3bn will be difficult to recoup.

Several class-action lawsuits have begun, focused on what lawyers believe were misleading statements in the fund documents about whether insurance policies would cover losses in full.

Law firm Boies Schiller Flexner, which is preparing one class-action suit, said the latest offer from Credit Suisse had “alarmed” its clients. “This is a concerning move from Credit Suisse, appearing to constitute a derisory inducement to investors not to litigate valid claims against Credit Suisse or to drop lawsuits already commenced,” it said.

The bank said clients who took advantage of the offer, which was first reported by Reuters, would not have to forgo future legal action, but they would need to agree that what they gained from litigation would be reduced by the amount they were reimbursed.

Credit Suisse said it had been in discussions with clients in recent months. “We have taken their feedback on board, explored the viability of a number of scenarios and, starting with clients in Switzerland, we are now able to grant special conditions as a gesture of our commitment to these important relationships,” it said.

A person close to the bank added: “It’s a free option, we’re not asking investors to give anything up. But it’s only fair to other investors — and shareholders — that any benefits that clients accrue are taken into account if they go down the legal route”.

Credit Suisse waived management fees on the Greensill funds after they were suspended in March.

This week the Financial Times reported that Credit Suisse had been forced to delay the release of the much-anticipated report into its own failings around the collapse of Greensill after its headquarters were raided by Swiss police.

Last month, the bank further angered its clients after it revealed they would be charged $145m as part of efforts to recoup the money owed to the funds, which included costs of keeping Greensill Capital afloat.