Financial Results

UBS Offers To Refund Clients Greensill-Related Losses

Tom Burroughes Group Editor 18 June 2024

UBS Offers To Refund Clients Greensill-Related Losses

UBS is making the offer as it continues to unwind problems it inherited when it bought its stricken Swiss rival in the spring of 2023. 

UBS has said that it will give holders of Credit Suisse funds linked to the failed Greensill Capital business 90 per cent of their money back. The Zurich-listed bank is working through legacy issues it inherited with its takeover of Credit Suisse last March.

The bank said the Credit Suisse Supply Chain Finance Funds have made an offer to redeem fund units. Fund investors who choose to accept the offer will be redeemed at 90 per cent of the net asset value determined on 25 February 2021, net of any payments made to the fund investors since then, through newly-established feeder subfunds. 

UBS said the offer started yesterday and will remain open until 31 July.

Shares in UBS were up 1.3 per cent at SFr27.27 ($30.6) per share at around 13:00 Swiss time yesterday. 

The collapse of Greensill Capital, a provider of supply-chain finance, was one of a string of missteps and scandals that hammered Credit Suisse’s share price, leading to the “shotgun wedding” of spring last year. 

“The offer aims to give fund investors certainty, an accelerated exit from their positions and a high level of financial recovery. It will allow an early exit from fund investments compared to distributions under the ongoing recovery process,” UBS said in a statement. The offer will have no impact on UBS financial results or its expected amount of Common Equity Tier 1 capital, it said.

UBS said it expects to record a provision of around $900 million on a consolidated basis in connection with the offer in the second quarter of this year.

The investment in the funds will be managed as part of UBS’s non-core and legacy portfolio.

Supply-chain finance is a type of cash advance, similar to invoice finance, based on the credit rating of companies in the supply chain. Smaller firms can benefit from the higher credit scores of their buyers, and buyers can extend payment terms. It has traditionally been a field for large banks. The field is an example of what might be called alternative finance, and has attracted funds at a time when more conventional lending has been squeezed by ultra-low/negative interest rates.

Another blow to Credit Suisse around the same time as the Greensill saga were losses that the bank sustained through exposure to the failed Archegos Capital Management organisation, a hedge fund structured as a single-family office. 

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