Loss minimisation for investors in the Greensill Funds and for clients of Greensill Bank
The Greensill case affects Greensill Bank in Germany, the investment firm Greensill Capital in Australia and its subsidiary in the UK, as well as "Greensill Funds" managed by Credit Suisse and the fund house GAM.
Greensill Capital was founded in Australia in 2011 by former banker Lex Greensill. Greensill's business model was so-called Supply Chain Finance ("SCF"). With this instrument, companies can free up liquidity in the supply chain by obtaining interim financing from third parties for their liabilities to suppliers. Greensill bought these liabilities, bundled them and brought them to investors as an investment product.
Credit Suisse set up funds with a volume of 10 billion US dollars for wealthy clients and institutional investors. The funds invested in Greensill's investment products. In addition to promises of returns, insurance cover was also advertised. The most recent insurer of Greensill Capital was the Japanese insurance company Tokio Marine or its subsidiary BCC, which was bought from Insurance Australia (IAG) together with the Greensill insurance exposure in April 2019.
In July 2020, Tokio Marine withdrew insurance cover from the fund company Greensill Capital after risk limits were apparently massively exceeded. Credit Suisse was then no longer able to invest in any of the investment products issued by Greensill, which meant that all Greensill funds had to be closed in the meantime.
This led to the closure of the Greensill Bank in Germany, which was supposed to secure and refinance Greensill transactions. With the bank in Germany, Greensill Capital also raised several billion from German investors and institutional investors. The growth of the bank was exponential in the past years, especially as the bank lured with small interest rates in a zero interest rate environment. German municipalities were also clients of Greensill Bank.
Credit Suisse has reportedly now repaid investors 4.8 billion US dollars. Further repayments are tied to the maturity of the securitised corporate loans. The money can only be paid back when companies have settled the debts.
It can be assumed that Credit Suisse wants to appease investors with the repayments. This is against the explosive background that Credit Suisse had already known about the risks since 2019 - according to unconfirmed reports. The Credit Suisse risk management team in the UK is said to have warned of the risks at the time and wanted to discontinue the funds, but they were apparently overruled by Credit Suisse Chief Risk Officer Lara Warner, who has now had to take her own hat off. However, Credit Suisse certainly does not only want to appease the professional investors, but also to prevent possible class action lawsuits. The extent to which insurance companies will cover the damages is highly uncertain.
At the moment, it cannot be conclusively assessed who can be held responsible for the entire misery. Usually, several parties can be held liable, such as Greensill Bank, Greensill Funds, Greensill Capital, Credit Suisse, fund house GAM or their respective boards of directors and supervisory boards, the auditors and possibly also the supervisory authorities FINMA and BaFin. The addressees for claims for damages should emerge in the course of the pending criminal proceedings at the latest.
What should be done now?
Since the addressees of the claims have not yet been finally determined, one should currently wait for the outcome of the proceedings of the financial supervisory authorities and the criminal investigations. This does not mean, however, that aggrieved parties should remain inactive, nor should they do so in view of the limitation period.
We offer aggrieved parties to participate in our collection procedure.
Why should you register with us for the collection procedure?
We are an internationally active law firm with a great deal of experience and knowledge in the field of investor protection. In addition, Dr. Scheiber has extensive knowledge of the fund business due to his former work as a fund investment structurer. Due to our office in Liechtenstein, we are not geographically close to the potential German and Swiss claimants.
"Although criminal investigations are currently underway, aggrieved parties should not remain idle."
- Dr. Florian Scheiber - Attorney at Law
Information on the collection procedure
The collective procedure is currently terminated. However, we will be happy to examine your request individually.