UBS offer to pay back 90% of Credit Suisse customers' Greensill losses

17 June 2024 , 11:05

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UBS is looking to close the chapter on a damaging saga that was among a number of scandals that led to the collapse of Credit Suisse and a rescue takeover (Image: PA Archive/PA Images)

Swiss banking heavyweight UBS has proposed to reimburse former Credit Suisse clients 90% of the funds they invested with the now-defunct finance company, Greensill Capital.

The offer, which was initiated on Monday, will be available until July 31, and UBS plans to set aside $900million (£710million) in Q2 to cover the costs. UBS emphasised that this provision would not significantly impact its financial standing.

The bank is eager to put an end to a damaging chapter that contributed to a series of scandals leading to Credit Suisse's downfall and subsequent rescue takeover. Last year, UBS acquired its competitor amid concerns that significant losses at Credit Suisse could destabilise the global banking system, prompting Swiss regulators' intervention.

In early 2021, Credit Suisse found itself vulnerable due to the collapse of UK supply chain finance firm Greensill Capital, which had provided loans to numerous customers. These loans were bundled together and sold off via a Credit Suisse fund to external investors who would purchase a stake in the loans and profit when they were repaid.

Although these loans were insured, the company collapsed when its primary insurer, Tokio Marine, chose not to renew the insurance. UBS stated that its offer to former Credit Suisse investors affected by the Greensill collapse "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," it was further elaborated.

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