The level of oversight and risk management at the bank’s asset management division is under scrutiny,particularly as Gottstein had ordered a review of the Greensill funds last year.

He said he was scrutinising the structure and internal position of the asset management unit,which is part of the Credit Suisse international wealth management division.

Gottstein said the closed supply chain finance funds had received an additional $US800 million since their suspension.

This brought current funds to $US1.25 billion on top of the amount already repaid to investors,and the funds continued receiving cash “on a daily basis” as the underlying receivables and notes reached their term.

“I cannot promise a specific result,” he said at the Morgan Stanley Financials Conference,of efforts to return proceeds at maximised value to investors. “But I can promise that we will undertake all our efforts to reach the best possible outcome for our supply chain fund investors.”

Supply-chain financing,or reverse factoring,is a method by which companies can get cash from banks and funds such as Greensill to pay their suppliers without having to dip into their working capital.

Greensill hadlarge exposure to one client,GFG Alliance,which is controlled by steel magnate Sanjeev Gupta and has started to default on its debts,according to Greensill’s insolvency application. Gupta said on Friday GFG was in talks with Greensill’s administrators on a standstill agreement to pause its debt payments to Greensill for an agreed period.

Costs ‘impossible to estimate’

The saga overshadowed an otherwise strong start to the year for Credit Suisse,whose shares opened up 1.8 per cent as it said it had achieved the highest level of pretax income in both January and February in a decade.

Andreas Venditti,analyst at Bank Vontobel,said the bank was facing a loss of confidence among investors.

“Investors have been reassessing the risks to which the bank is exposed. In a worst-case scenario the bank faces years of litigation,” he said.

“It is currently virtually impossible to estimate how high the direct costs of the case will be for Credit Suisse. Investors don’t like uncertainty.”

Three Credit Suisse investors,who declined to be named due to the sensitivity of the matter,told Reuters they were concerned about the fallout.

An investor in the bank’s debt said the main financial risk was to Credit Suisse’s reputation,which it said was a key asset for the wealth management business.

One Credit Suisse shareholder said it should fully compensate investors in the supply chain funds. A second said that,as well as reputational risk,it was worried about the effect on the bank’s future asset-raising and its credentials in the growing business of socially responsible investing.

Credit Suisse declined to comment beyond its statements.

The bank has hired external firms to help deal with regulators and insurers amid questions over the contracts that underpinned Greensill’s security. It has also recovered some $US50 million of the $US140 million bridge loan,it said.

Credit Suisse said that its asset management division,which sold the funds to investors,was working with Greensill’s administrator,Grant Thornton,and with other parties to facilitate the recovery of funds.

Japanese insurer Tokio Marine,which provided $US4.6 billion of coverage to Greensill credit notes through an Australian unit,is investigating the validity of those policies. A person with knowledge of the matter has said these were directly linked to the Credit Suisse funds.

Reuters