In the Alpine resort town of St. Moritz, horses without a rider crackled on the frozen lake, kicking snow in the face of the person dragging the snowboard behind them.
In February last year, a few weeks before public events across Switzerland were cancelled due to the coronavirus, Credit Suisse brought its most precious customers to White Turf-a century-old equestrian event sponsored by UBS Its unique dangerous “skiing” competition for decades.
Although seven fearless skiers risked their lives in the Credit Suisse Grand Prix, the biggest threat to the bank was one of the onlookers: British steel giant Sanjeev Gupta.
Today, Gupta’s large conglomerate GFG Alliance is faltering after the collapse of its largest bank, Greensill Capital. The metal group is also under investigation by the UK Serious Fraud Office. It denies any wrongdoing.
As we all know, Credit Suisse indirectly contacted Gupta through Greensill, who packaged loans into notes purchased by Swiss bank funds. When Greensill went bankrupt in March, Credit Suisse faced the fact that a large part of its debt could be bad debts, including loans to GFG.
However, it is not widely known until now that Credit Suisse also has an important direct relationship with Gupta.
A series of former executives of the Swiss bank revealed to the Financial Times how its private bankers and global leadership wooed the metal tycoon, offering him VIP treatment far beyond the trip to St. Moritz.
Having established a deep relationship with the Indian-born industrialist, Credit Suisse ignored warnings about corporate clients and its own bankers.
Credit Suisse provided Gupta with enlightenment on everything from the mortgage of the trophy mansion to the private audience of its then CEO, which will further anger its customers, who may face billions of dollars in losses.
It is expected that some of these customers will sue Credit Suisse, alleging failures in fund management methods. Greensill’s troubles followed, as the bank was mired in another risk management scandal due to its cooperation with the failed family office Archegos.
“The decision to fund entrepreneurs [Gupta] It’s a wrong decision at any cost,” said a former senior manager of the bank’s Australian operations, who cited the uneasiness of lending to Gupta as a reason for his resignation. The banker added: “A lot of money went to high risks. The situation. “
Credit Suisse and GFG declined to comment.
Credit Suisse spent several years wooing Sanjeev Gupta, filed for divorce at the end of March, and petitioned the courts of the United Kingdom and Australia to bankrupt several of his core businesses.
The Swiss bank recovered $1.2 billion for angry customers, and there are other tools available. According to people familiar with the terms, part of Gupta’s debt financing from Greensail benefited from personal guarantees, which may allow creditors to track down the so-called “Iron Man.”
To this end, according to three people familiar with the matter, Credit Suisse recently hired a private investigator in Kroll to track Gupta’s global assets.
Gupta conducted a five-year corporate acquisition frenzy and established a metal enterprise group with 35,000 employees. At the same time, he also accumulated a personal collection. Trophy assets. From private jets and helicopters with matching dressing tails, to London townhouses worth £42 million-owned in his wife’s name.
Credit Suisse does not need Kroll’s services to obtain information about another Gupta mansion: a 19th-century sandstone mansion overlooking Sydney Harbour.
“Credit Suisse provided a mortgage. They are proud of it,” the former executive said. “The pursuit of super mortgage loans in Australia is a key strategy.”
Helping Gupta buy a house worth 35 million Australian dollars (27 million U.S. dollars) owned by a trust supervised by an Australian stockbroker friend as part of the services provided by Credit Suisse as his personal wealth manager.
The Swiss bank also manages the wealth of Lex Greensill, the 44-year-old Australian founder of Greensill Capital, who was a paper billionaire before the collapse of his namesake financial company.
Managing the wealth of controversial businessmen is part of the Credit Suisse program. Helman Sitohang, the bank’s long-term head of the Asia-Pacific region, established a franchise to cater to the region’s wealthiest businessmen, but also took some reputational risks.
“We position ourselves as a bank for entrepreneurs,” Sitohang said in February, just days before Greensill Capital collapsed. “In Asia, this positioning resonates very well for us.”
Gupta and Greensill even share the same private banker at Credit Suisse: Shane Galligan, one of Sitohang’s biggest rainmakers, whose mission is to manage funds for Australia’s wealthiest tycoon.
“If you look at Asia’s strategy from the perspective of supporting ultra-high-net-worth customers, no one in private banks is bigger than him,” said another former Credit Suisse banker. “He covers billionaires. That’s his business.”
Galligan ensures that Gupta has a complete five-star Swiss banking experience. In addition to inviting the steel tycoon to participate in alpine horse racing, he also facilitated a coveted meeting with Tidjane Thiam, the bank’s then chief executive officer, in 2019.
According to the former Credit Suisse banker, Galligan and Sitohang played an important role in dispelling concerns about the bank’s growing entanglement with Gupta and Greensail. A person close to the bank said that Sitohang is not close to Gupta or Greensill.
Another former executive recalled an internal conference call between Galligan, Lara Warner (Chief Risk and Compliance Officer until she left due to the fiasco of Greensill and Archegos) and several other bankers in 2020, discussing their The growing risks of Greensill’s business.
“There is no sensitivity or awareness of the risk dimension,” he said. “The tone is purely,’We want to provide banking services for this entrepreneurial client.'”
Credit Suisse said Sitohang and Galligan declined to comment.
Flights to Zurich
In February 2020, the same month Credit Suisse welcomed Gupta to St. Moritz, the UK banking regulator contacted SFO attention About his family’s opaque metal financial group.
A few months later, the Swiss bank received a severe warning. Commodity traders in July 2020 Trafigura warns Credit Suisse The bank’s supply chain finance fund appears to contain suspicious invoices from the Gupta business empire.The warning came when the bank was in crisis Internal review Fund, as reported by the Financial Times Unusual relationship Greensill’s shareholder SoftBank.
However, not only did Greensill-related funds continue to provide loans to Gupta, Credit Suisse is also considering providing the steel giant with its own balance sheet.
In October 2020, Gupta announced a plan to control one of Germany’s oldest and most symbolic industrial companies: ThyssenKrupp’s 200-year-old steelmaking plant.
Be the steel king Unveiled a bold bidHe has not yet committed to debt financing, but he does have letters of support from two familiar financial institutions in his pocket: Greenhill and Credit Suisse.
The bid to support ThyssenKrupp is not a one-off. Another former senior executive said that Credit Suisse’s investment banking division “blooms everywhere” and that GFG was attracted by the potential costs of a seemingly endless series of transactions and won its long-touted Australian-listed InfraBuild business. Authorization.
However, the cost never came. As Greensill began to disintegrate and threatened to bring GFG down, both transactions failed earlier this year.
Greensail’s fate was doomed on the last weekend of February, when Credit Suisse decided Freeze its $10 billion range The Supply Chain Finance Fund discovered that the key insurance contract supporting the invoice securitization machine has expired.
On the Friday before the big decision, Gupta flew to Zurich with his loyal adjutant. Jay Hambro, A descendant of the British banking dynasty. Twelve months after the steel tycoon enjoyed Credit Suisse’s hospitality in White Turf, he entered the magnificent headquarters of the Swiss Bank in Parade Square and received a very different reception.
According to people familiar with the matter, Gupta and Hambro lobbied the banks not to stop interfering in these funds.
However, this time, Credit Suisse is unwilling to accept its once highly valued customers.
Additional reporting by Owen Walker and Stephen Morris