How Greensill Was My Valley: Alternative Supply Chain Provider Forced into Administration

Date
24 March 2021

Jaysen

Founder, TCLA
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  • Feb 17, 2018
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    Interesting move from Credit Suisse:

    Credit Suisse Group AG is leaning toward letting clients foot the bill for eventual losses in funds that the bank ran with former billionaire Lex Greensill’s company, according to a person familiar with the matter.
    The bank considers that the risks around Greensill were known and the funds were only marketed to investors able to assess such risks, the person said, declining to be identified discussing private matters. The Zurich-based lender didn’t take any substantial loss due to Greensill in the first quarter.
    The bank’s stance runs counter to reports last month suggesting executives were considering compensating investors hit by the collapse of the funds. Credit Suisse marketed its popular supply-chain finance funds as among the safest investments it offered, because the loans they held were backed by invoices usually paid in a matter of weeks.
    But as the funds grew into a $10 billion strategy, they strayed from that pitch and much of the money was lent through Greensill Capital against expected future invoices, for sales that were merely predicted. Now, investors in the frozen funds are left facing the potential for steep losses as the assets are liquidated.
     

    Matt_96

    Legendary Member
    Premium Member
  • Dec 15, 2018
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    I think this story is fascinating, and it's one I'm watching closely, although not necessarily just for interview practice. It has every single element of a classic financial scandal - I wonder if in 10 years there might even be a film made about it. You have the larger-than-life salesman in an otherwise dull field, the extremely complex world-spanning financial arrangements that few seem to understand, a naive high-profile politician and accompanying government scandal, billions of pounds on the line, a house of cards that has quickly come crashing down and to top it off, everything seems to have been facilitated by a low-profile middle-aged dude in a sleepy Australian suburb that nobody thought was much of a risk taker.

    The FT have been really on the money with this the whole way, so any of their articles on it are well worth a read! There is a collection here (although you may need a subscription to access them). I also think the respective involvement of different city firms is also an element worth exploring further. It's not just Bakers and A&O, but a large number of firms with prominent securitisation/asset-backed and commodity finance teams (which would include supply-chain finance expertise) such as Simmons & Simmons have also been involved. And this involvement is likely to continue as creditors seek to get their money back through legal action, the insurers and brokers will also want advice on the risks and mitigation, and there will probably be a large-scale multi jurisdictional regulatory investigation as well. Plenty to keep a firm busy!