Softbank Says Credit Suisse to Blame For Fund’s $440 Million Greensill Loss

Softbank Group Corp., facing a $440 million lawsuit from Credit Suisse, said the bank was to blame for some of the investor losses tied to the collapse of Greensill Capital.

In the latest stage of the long-running dispute, Softbank said the now defunct Swiss lender’s executives had agreed to a deal with Greensill that would have helped repay the bank’s investors only for the transaction to stall.

UBS Group AG is pursuing the London claim on behalf of its former Swiss rival in a bid to recover funds for investors trapped in the supply chain finance vehicles. The bank’s lawyers said that financier Lex Greensill had “no intention” of completing the deal and didn’t have the funds.

Credit Suisse Lodges $440M Claim Against SoftBank in Greensill Dispute

In the most recent court filing, Softbank raked over the last months before the high-profile collapse of Greensill’s supply chain business in 2021. It was one of several major scandals that knocked confidence in Credit Suisse, left clients with hundreds of millions of dollars of losses and ultimately led to its takeover by UBS. Meanwhile, Softbank’s Vision Fund wrote down its own $1.5 billion holding in Greensill to close to zero.

The London suit is set to consider the way that Greensill restructured its relationship with Katerra Inc., a US-based construction company in which SoftBank was a major investor. Credit Suisse alleges SoftBank concocted the restructuring in 2020 so that it could pull its own money out of the firm, knowing full well that Greensill, already in free-fall, would be unable to repay the $440 million it owed to Credit Suisse.

UBS has been seeking to clear the legacy issues at Credit Suisse and said in June that it would offer investors in the supply chain fund 90% of their value. Some $2.3 billion remain in the vestigial funds, according to company filings.

Lex Greensill is separately facing a possible director ban after the UK’s Insolvency Service alleged that he was unfit to manage a company for a period of up to 15 years. The financier is contesting the suit.

On Dec. 31 2020, Credit Suisse and Greensill struck a deal that would enable Greensill to repurchase $440 million of notes in the supply chain finance funds, according to the Softbank filing. But the agreement was cancelled before it settled.

“In so doing, Credit Suisse itself caused the loss it now seeks by the claim,” Softbank’s lawyers wrote in the filing.

Softbank said Lex Greensill was also asked whether the $440 million would be used to “plug that hole and be paid to Credit Suisse.”

“Yes, it was the absolute understanding of all of the parties,” he replied according to court filings. “There’s no coincidence to the number.”

Credit Suisse’s lawyers cited “a lack of liquidity within the Greensill Group” as the reason why the trade didn’t complete and said the bank’s executives tried to keep the deal afloat.

Just a few days after the deal was signed, Credit Suisse’s then head of asset management, Eric Varvel, emailed Lex Greensill: “I really believe the right way to approach this – for both of us – is to complete the trades that have been confirmed,” he said.

“Lex Greensill had no intention to permit the Greensill Group to proceed with and complete” the trade, UBS’ lawyers said. A spokesman for Greensilll didn’t immediately respond to an email seeking comment outside of normal US working hours.

Softbank said that the Swiss bank’s executives agreed that the fund’s notes would instead “be partly held to maturity and partly purchased by the end of March 2021” to allow Greensill to raise equity.

The finance firm instead collapsed on March 8.

Photograph: Signage at a SoftBank Corp. store in Tokyo. Photo credit: Toru Hanai/Bloomberg

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