Credit Suisse Group AG
UBS Group AG
to be its new head of asset management and said it would make it a separate division, removing one of its most senior executives from the role as it seeks to recoup money for investors in its troubled supply-chain finance funds.
It made the announcement while warning in its annual report that it has been informed some of the underlying investments in the funds won’t be paid back when they are supposed to be.
The bank also indicated it may need to add additional capital as a result of the funds’ problems. It said it has agreed with Swiss regulator Finma to add an extra capital buffer to cover risks that may be underestimated or aren’t covered by other capital requirements, without giving details on the amount or timing.
Mr. Koerner previously was chief executive of asset management at UBS, among other roles he held there between 2009 and 2020. Before that he worked at Credit Suisse for 13 years, including as Switzerland CEO. He replaces Eric Varvel, a 31-year veteran of Credit Suisse who will stay at the bank and keep his other roles as Credit Suisse’s U.S. CEO and chairman of its investment bank.
The sudden shift in the unit was triggered by the problems in the supply-chain finance funds, Credit Suisse said. It froze four funds managing $10 billion this month as Greensill Capital, the company that supplied the funds with its investments, prepared to enter insolvency proceedings in the U.K. Credit Suisse said earlier this week it faces financial charges from the funds’ collapse and a $140 million loan it made to Greensill.
On Tuesday, Chief Executive
said investors have gotten $3.1 billion cash back and that the funds have more than another $1 billion in cash to return.
However, in its annual report Thursday, Credit Suisse said “there remains considerable uncertainty regarding the valuation of a significant part of the remaining assets, including the fact that the portfolio manager has been informed that certain of the notes underlying the funds will not be repaid when they fall due.”
Greensill’s operations seized up after it couldn’t renew credit-insurance policies that Credit Suisse and other investors relied on to make the investments safer. Credit Suisse is now working with Greensill’s bankruptcy administrators to get money back. It removed the funds’ managers and the head of its European asset-management division from their jobs last week “for the time being,” according to an internal memo, and named new fund managers to oversee the funds’ liquidation.
Greensill specialized in supply-chain finance, a type of short-term cash advance to companies to stretch out the time they have to pay their bills. The Credit Suisse funds purchased notes from Greensill backed by companies’ payments. Credit Suisse’s investment bank separately lent money to Greensill, and its founder, Lex Greensill, was also a bank client.
Credit Suisse on Tuesday said it has collected $50 million of the $140 million loan it made to Greensill, and that the rest is backed by collateral. The funds are a knottier problem because some clients are pressuring the bank to make good on their investments, arguing that they were incorrectly described as safe.
Pension funds, corporate treasurers and wealthy investors had bought the funds as a higher-yielding alternative to money-market funds.
Write to Margot Patrick at [email protected]
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