By Olivier Hirt
ZURICH (Reuters) – Crisis Credit Suisse goes on the offensive under new chairman Antonio Horta-Osorio by providing free services to investors in collapsed supply chain finance funds linked to Greensill, a a person familiar with the matter told Reuters.
“It’s a goodwill gesture,” the insider said.
Switzerland’s second-largest bank plans to reimburse fees on most products and services to customers on a quarterly basis, the person said. This would cover standard brokerage fees as well as discretionary mandate fees, investment advisory fees and banking services.
Funds of funds from other providers, for example, are excluded from the fee waiver. It was not yet clear how long the offer would last or how much it would ultimately cost.
The bank’s $ 10 billion funds linked to Greensill imploded in March when insurance coverage expired, pushing the insolvency finance group.
Credit Suisse worked with advisers to help recover the funds, of which around $ 7.0 billion had been recovered by the end of September.
Many clients who sold Greensill funds as manageable risk products reacted angrily and some have taken legal action. Analysts have estimated the possible legal costs at $ 2 billion.
“Credit Suisse recognizes that this has been a difficult time for investors in Supply Chain Finance funds. We continue to make good progress in collecting liquidity both from debtors and through insurance claims.” declared the bank.
“We have therefore also actively engaged with our clients in recent months to explore possible measures that would improve their situation. We have taken their feedback into account, explored the viability of a number of scenarios and, starting with clients in Switzerland, we are now able to grant special terms as a sign of our commitment to these important relationships “, he added in a statement.
“FREE OPTION” The bank is launching the fee waiver program for customers whose accounts are reserved in Switzerland on Wednesday, the source said. The offer will then be extended to other regions. The program will currently cover the Swiss, Asia-Pacific and International Wealth Management divisions.
The management fees on the Greensill funds themselves have already been removed since March.
Customers participating in the program would not have to forgo legal action, but should accept that any gain from legal action will be reduced by the amount of reimbursement received.
“Essentially, this is a free option,” the source said.
Customers who have already taken legal action have been excluded from the program. Reuters reported in March that the bank was considering compensating customers affected by the collapse in funds given reputational damage and possible lawsuits. The funds’ shares were held by around 1,000 professional investors and very wealthy clients among the bank’s core clientele. But the bank refrained from directly compensating customers for fear of setting a precedent.
The bank informed the Swiss supervisory body FINMA of the plan to eliminate customer fees. FINMA initiated formal proceedings against Credit Suisse over Greensill in March. Police also raided the bank’s offices and confiscated documents last month as part of an investigation that the bank said was not directed against Credit Suisse.
Credit Suisse has commissioned its own investigation into the Greensill disaster. It is not known when the report will be released.
A report in July of a second debacle, the collapse of investment fund Archegos Capital that cost the bank $ 5.5 billion, was scathing.
Horta-Osorio wishes to announce by the end of the year what impact the two incidents will have on its strategy and structure.
(Reporting by Oliver Hirt, written by Michael Shields)