Japanese insurer Tokio Marine,which provided $US4.6 billion of coverage to Greensill credit notes,said that it was investigating the validity of those policies which it inherited when it bought Insurance Australia Group in 2019.
A source familiar with the situation said the policies were directly linked to the $US10 billion Credit Suisse funds.
Credit Suisse said in a note to investors on Tuesday it had not been informed of any insurance cancellation “until very recently,” and that existing policies from Insurance Australia had remained unchanged.
The bank declined comment on the Tokio Marine probe.
If Greensill’s lending practices did not meet standards laid out in the insurance contract or were inconsistent with normal accounting rules,then an insurer would have grounds to challenge whether coverage applied,supply chain experts have said.
Greensill declined to comment.
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“We have concerns about the validity of all Greensill policies and are conducting an investigation,” Tokio Marine spokesman Tetsuya Hirano said.
Hirano said that the $US4.6 billion worth of coverage attributed to Tokio Marine Holdings in court filings did not reflect the likely loss. He declined to comment further.
In Germany,where Greensill runs a bank,financial regulator BaFin has filed a criminal complaint with prosecutors in Bremen,where it is based. The precise details are not known.
Blow for CEO
The funds’ troubles are a blow for Credit Suisse boss Thomas Gottstein,who became chief executive in the aftermathof a spy scandal and just as the coronavirus crisis struck.
The asset management unit behind the Greensill strategy was hit by a large impairment charge on a hedge fund investment in the fourth quarter.
Credit Suisse said in a memo sent to employees on Wednesday that Michel Degen,head of asset management in Switzerland and the EMEA region,was temporarily stepping aside along with managers Luc Mathys and Lukas Haas.
Reuters could not immediately reach Degen,Mathys or Haas for comment. According to their LinkedIn profiles,Mathys ran fixed income at the division and Haas worked in credit risk management. Haas was listed as the fund manager for some of the Greensill funds according to various fund websites.
Meanwhile in Australia,two people familiar with the matter said that Credit Suisse had appointed receivers to recover a bridging loan to a Greensill company.
Credit Suisse was advising Greensill on a potential IPO last year and had lent on expectations the $US140 million would be repaid when it listed,one of the people said.
Credit Suisse declined to comment and Greensill did not respond to requests for comment.
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The impact of Greensill’s insolvency is also being felt at its largest client,GFG Alliance,an umbrella company for metal tycoon Sanjeev Gupta’s network of steel,aluminium and energy companies.
A spokesman said on Wednesday GFG had appointed an advisory team including boutique advisory house PJT Partners,turnaround advisor Alvarez and Marsal and law firm Norton Rose Fulbright to “support refinancing efforts and in negotiating a standstill agreement with Greensill’s administrator”.
Reuters
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