Credit Suisse Group froze four more funds that invested in the bank's $10 billion supply chain finance strategy, adding to the widening scandal surrounding the bank's exposure to Lex Greensill's failed empire.
The additional funds have about $1.2 billion in assets, some of which they had put into the four Greensill-linked funds that Credit Suisse is now liquidating. The bank suspended them effective March 1, the same day it froze the supply chain finance strategy. It posted the decision in an investor update on its website dated March 9.
The largest of the additional funds are the $701 million Credit Suisse (Lux) Multi Strategy Bond Fund and the $303 million Credit Suisse (Lux) Multi Strategy Alternative Fund.
The suspension of those funds compounds a crisis that's forced Credit Suisse to seek outside help to deal with regulators' queries and threatens to saddle the bank with losses from a loan that it made months before the collapse of Greensill's empire. For Chief Executive Officer Thomas Gottstein, it's arguably the worst reputational hit since taking over about a year ago in the wake of a damaging spying scandal.
Credit Suisse froze the supply chain finance strategy — which invested in short-term financings arranged by Greensill — after doubts emerged about the valuations of some of the assets, kicking off a chain of events that culminated in the collapse of Greensill Capital. The bank had held them up as a success story as recently as December. Though the money pools have returned most of their cash, about two-thirds of investor money remains tied up.
The bank said it's looking at various options for reopening the additional four funds that it froze along with the Greensill-linked strategy. The other two funds in that group are the Credit Suisse (Lux) Qatar Enhanced Short Duration Fund and Credit Suisse (Lux) Institutional Target Volatility Fund.
Credit Suisse has started an internal probe into the collapse of the supply chain finance strategy. It temporarily replaced three employees in its asset management unit tied to the funds. Michel Degen, head of asset management in Switzerland and EMEA, is being replaced on an interim basis by Filippo Rima, according to a person with knowledge of the matter. Luc Mathys, head of fixed income in the unit, and another manager who ran the funds were also suspended from their roles, the person said.
The Swiss lender is also reaching out to external firms to deal with regulators' queries surrounding the collapse, people familiar with the matter said, asking for anonymity in discussing internal information.