Crisis-hit Credit Suisse is going aggressive under new chairman Antonio Horta-Osorio, providing free services for investors in a supply chain finance fund linked to Greensil, a person familiar with the situation told Businesshala. told.
“It’s a gesture of goodwill,” said the insider.
Switzerland’s second largest bank plans to refund customers charges on most products and services on a quarterly basis. This will include standard brokerage fees as well as discretionary mandate fees, investment advisory fees, and banking services.
For example, funds received from other providers are excluded from the fee waiver. It was not yet clear how long the proposal would last or how much it would eventually cost.
The bank’s $10 billion fund linked to Greensil got stuck in March when insurance cover ran out, pushing the financing group into bankruptcy.
Credit Suisse is working with advisors to help recover the fund, about $7.0 billion of which was recovered by the end of September.
Many clients who were sold Greensil Fund as products with a manageable risk reacted angrily, and some have taken legal action. Analysts have estimated potential legal costs at $2 billion.
“Credit Suisse acknowledges that this has been a difficult period for investors in supply chain finance funds. We continue to make good progress on cash recovery from liabilities and through insurance claims; however, in achieving recovery from focus areas. It will take time,” the bank said.
“That’s why we have been actively engaging with our customers in recent months to explore possible measures to improve their situation. We have taken their feedback on board, explored the feasibility of several scenarios and, starting with customers in Switzerland, we are now able to offer special terms as a sign of our commitment to these important relationships.” It added in a statement.
The bank on Wednesday is launching a fee waiver program for customers whose accounts are booked in Switzerland. The proposal will then be expanded to other areas. The program will cover the Switzerland, Asia-Pacific and International Wealth Management divisions for now.
Management charges have already been waived off on Greensil Fund since March.
Customers participating in the Program will not have to forgo legal action, but they must agree that any benefit from legal action will be reduced by the amount of reimbursement they receive.
“Essentially, it’s a free option,” the source said.
Customers who had already initiated legal proceedings were excluded from the program.
Businesshala reported in March that the bank was looking at indemnifying customers affected by the collapse of funds, given reputational damage and potential lawsuits. The fund’s shares were held by about 1,000 professional investors and super-rich clients among the bank’s main clients.
But the bank refrained from paying compensation directly to customers for fear of setting a precedent.
The bank has informed Swiss watchdog FINMA about its plans to waive off fees for customers.
FINMA launched formal proceedings against Credit Suisse over Greensil in March. Police also searched the bank’s offices last month and seized documents, in an investigation the bank said was not directed against Credit Suisse.
Credit Suisse has opened its investigation into the Greensil disaster. It is not known when the report will be published.
A report in July on a second debacle, the collapse of investment fund Archegos Capital, which cost the bank $5.5 billion, was horrifying.