Unlock the Editor’s Digest for free
Roula Khalaf, Editor of the FT, selects her favourite stories in this weekly newsletter.
The main negotiator tasked with recovering billions of dollars lent by Greensill Capital has left UBS, as the Swiss bank attempts to take control of a three-year scandal that led to the collapse of its former rival Credit Suisse.
UBS has restructured a special task force set up to deal with the fallout from Greensill’s implosion, with $2.3bn of debts still outstanding, according to people with knowledge of the internal moves.
Eraj Shirvani, a former Credit Suisse executive who acted as a lead negotiator in trying to recoup the assets, left UBS over the summer, while the bank has also cut back on the use of recovery advisers such as Swiss law firm Walder Wyss.
The Greensill affair was one of the final major scandals in the years running up to the implosion of Credit Suisse, which was rescued by UBS last year.
UBS has tried to kill off a spate of lawsuits over the Greensill losses by offering to repay up to 90 per cent of the money owed to former Credit Suisse clients, whose money was used by the collapsed specialist finance firm.
Around 95 per cent of fund investors have signed up to the UBS offer, though some large investors are continuing to pursue legal claims.
Credit Suisse had persuaded 1,200 of its most prized clients to invest in the group of so-called supply-chain finance funds, which promised enticing returns with little risk. But in March 2021, Greensill filed for bankruptcy, trapping $10bn in the funds.
Several investors joined class action lawsuits against Credit Suisse, while the bank was also investigated by Swiss police — including raids on its offices, bankers’ homes and a hotel room — over its dealings with Greensill.
In the wake of Greensill’s collapse, Credit Suisse set up a specialist group to recover the assets for clients.
Shirvani, a 36-year Credit Suisse veteran who was chair of emerging markets at the bank, was given the responsibility of leading negotiations with the biggest debtors, including industrialist Sanjeev Gupta’s GFG Alliance and the Bluestone Resources mining group owned by West Virginia governor Jim Justice.
Walder Wyss advised the task force on negotiations as well as on litigation issues.
But since taking control of Credit Suisse, UBS has taken responsibility for reclaiming the assets in-house, according to people involved in the moves. UBS has tried to reduce the amount it spends on external service providers.
UBS is now the biggest creditor on the Greensill debts, having bought up more than 95 per cent of fund units from former Credit Suisse clients.
The bank is still trying to recover around $2.3bn through a series of negotiations, lawsuits and insurance claims. In April UBS said recovery of the assets could last until at least 2031 and cost $321mn, up from a previous estimate of $291mn.
UBS declined to comment. Shirvani and Walder Wyss did not respond to a request for comment.
Read the full article here
