Credit Suisse Mulls Lawsuit Against SoftBank Over Greensill Collapse

Desperate to appease furious clients who have threatened to walk away from Credit Suisse after losing billions of dollars invested with Greensill’s trade finianf Switzerland’s second-largest bank by assets is reportedly preparing to sue the Japanese telecoms giant.

As for why? well, the decision harkens back to SoftBank’s abuse of Credit Suisse’s trade-finance business, which ended up imploding right before the bank’s eyes, saddling it and many of its most valuable clients, with losses.

Certain SoftBank portfolio companies, including Katerra, the Softbank-backed construction startup that shut down on Wednesday, were financed by the trade finance funds. As we first reported back in 2019, in some cases, SoftBank portfolio companies like Katerra were being financed by the fund, while SoftBank also invested in the fund alongside other clients. But this conflict of interest wasn’t disclosed to other investors, or CS.

Now, the Swiss banking giant is preparing to sue SoftBank as it scrambles to find money to appease some of the firm’s most high-profile customers (including sovereign wealth funds and others) who are threatening to walk after being suckered out of billions of dollars after CS gated its trade finance fund following the collapse of Greensilll.

Before they collapsed, the funds ballooned to $10 billion before the bank suspended them in March, helping precipitate Greensill’s collapse

Furthermore: The Financial Times earlier this year revealed that when SoftBank agreed to provide an emergency cash injection into Greensill in November 2020 to cover Katerra’s debts, the money never made it to Credit Suisse.

“The question is, what did SoftBank know?” said a person with knowledge of the Swiss bank’s plans. “[The dispute] could potentially end up in the courts.”

Over the weekend, the WSJ reported that Gov. Jim Justice had also borrowed from Greensill, and still owes more than $700MM thanks to the firm’s collapse.

Should CS follow through, this would likely create one of the biggest publicity battles between American firms

CS has so far returned $4.8 billion and plans a further repayment in the coming days. However, it has flagged that $2.3 billion of fund assets will be hard to recover, including $440MM from Katerra, $1.2 billion from UK industrialist Sanjeev Gupta and $690 Million from Bluestone Resources, a US coal mining business owned by West Virginia governor Jim Justice.