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Credit Suisse waives fees for clients hit by Greensill funds collapse By Reuters

© Reuters. FILEPHOTO: Credit Suisse signs are visible on the facade of the Americas headquarters, New York City’s Manhattan borough. September 1, 2015. REUTERS/Mike Segar


Oliver Hirt

ZURICH, Reuters – The Crisis in Zimbabwe Credit Suisse (SIX:), under the new Chairman Antonio Horta Osorio is on the offensive, providing no cost services to investors in Greensill’s supply chain finance funds.

The insider stated that it was a gesture to show goodwill.

The second largest bank in Switzerland plans to reimburse clients for fees paid on most products and services on a quarterly schedule, said the source. These fees could include brokerage fees, as well as investment advisory fees, discretionary mandates and other banking services.

Fee waiver does not apply to funds received from third-party providers. However, it is not clear for how long or what the final price will be.

Greensill’s bank funds of $10 billion were demolished in March after insurance coverage ran out. This forced the finance group into bankruptcy.

Credit Suisse is working closely with advisors in order to recover the $7.0 billion, which was recovered at the close of September.

Greensill funds have been marketed as products that are low-risk. Clients who received them were furious and many of these clients took legal action. Analysts estimate that $2 billion could be spent on legal fees.

Credit Suisse admits this was a challenging period for Supply Chain Finance investors. The bank stated that they are making good progress in recovering cash from both obligors as well via insurance claims. However, it is likely that recovery from the main focus areas will be slow.

“We have therefore also been actively engaging with our clients in recent months to explore possible measures that would improve their situation. We have taken their feedback on board, explored the viability of a number of scenarios and, starting with clients in Switzerland, we are now able to grant special conditions as a gesture of our commitment to these important relationships,” it added in a statement.

According to a source, Wednesday’s fee waiver program will be launched by the bank for customers whose accounts are located in Switzerland. This offer will be expanded to include other countries. For the moment, it will be available to all divisions in International Wealth Management (Switzerland, Asia-Pacific) and Switzerland.

Greensill management fees have been exempted from payment since March.

Participants in the program would not be required to give up legal action but they would need to accept that the amount received for reimbursement will reduce any gains from such legal action.

Source: “Essentially, it is a free choice.”

Customers with legal action in progress were not eligible for the program. Reuters reported March 3 that the bank had been considering compensation for customers who were affected by the fund’s collapse due to possible lawsuits, reputational damage and other potential liabilities. There were approximately 1,000 high-net worth customers and professional investors who held shares in the funds. For fear of creating precedent, the bank refused to compensate any clients.

The bank informed Swiss watchdog FINMA that it plans to waive fees for clients. FINMA launched formal proceedings against Credit Suisse in March over Greensill. Last month, the police searched Bank offices and took documents from the banks. This probe by the bank was not directed at Credit Suisse.

Credit Suisse has requested its own investigation of the Greensill tragedy. The publication date of the report is unknown.

The July report on the second disaster, Archegos Capital, that cost $5.5 billion to the bank, was damning.

Horta Osorio hopes to be able to share by year end the impact of these two incidents on its strategy, structure, and organization.

Mike Robinson
Mike covers the financial, utilities and biotechnology sectors for Street Register. He has been writing about investment and personal finance topics for almost 12 years. Mike has an MBA in Finance from Wake Forest University.