UBS offers to repay 90% to clients hit by Greensill implosion

UBS has offered to pay former Credit Suisse clients 90 per cent of the funds they invested with Greensill Capital, as the Swiss lender attempts to draw a line under a scandal it inherited after rescuing its rival.

Hundreds of Credit Suisse’s most prized clients were hit by the collapse in 2021 of Greensill, a firm the Swiss bank teamed up with to set up $10bn of supply chain finance funds that promised low risks and high returns.

The clients have so far recouped over $7bn of the trapped funds. The Swiss bank said on Monday that the offer is open until the end of July and that it will take a $900mn provision tied to it in the second quarter.

“It’s a good step that should have happened much earlier,” said one of the former Credit Suisse clients.

Founded by Australian financier Lex Greensill, backed by SoftBank and advised by former UK prime minister David Cameron, Greensill failed after insurers decided not to renew cover. Its collapse triggered a lobbying scandal in the UK after it emerged Cameron had lobbied ministers to allow the group to access government-backed Covid-19 loan schemes.

“The offer aims to give fund investors certainty, an accelerated exit from their positions and a high level of financial recovery,” UBS said on Monday. “It will allow an early exit from fund investments compared to distributions under the ongoing recovery process.”

The scandal was one of several that damaged Credit Suisse in the months before its rescue by UBS was engineered by Swiss authorities in March 2023.

The debt recovery team, which transferred from Credit Suisse to UBS, is still trying to recoup $2.6bn from the supply chain finance funds. 

Greensill lent to a variety of businesses, including GFG, Sanjeev Gupta’s metals business; Bluestone Resources, a mining group owned by West Virginia Governor Jim Justice; and Katerra, a construction company funded by SoftBank’s Vision Fund.

In April UBS said recovery of the assets could last until at least 2031 and cost $321mn, up from a previous estimate of $291mn. It said the costs would be borne by the fund investors.

The offer would have no material impact on the bank’s financial results or capital requirements, UBS said.