Australian Regulators Scrutinising Credit SuisseUnit overGreensill
Australian Financial Review reported that Australian regulators have started scrutinising Credit Suisse’s Australian outpost’s involvement in Greensill Capital
Australian Financial Review reported that Australian regulators have started scrutinising Credit Suisse’s Australian outpost’s involvement in Greensill Capital and potential exposure to Greensill and its key clients. Australian Securities and Investments Commission and the Australian Prudential Regulation Authority had separately approached the bank’s management, with separate lists of questions for the bank. Australian Prudential Regulation Authority’s questions are focused on Credit Suisse Australia’s balance sheet exposure to interest is much broader and included Credit Suisse’s conflict management systems and due diligence practices.
Sources said ASIC is keen to understand how Credit Suisse Australia managed potential conflicts of interest, given the numerous ways it was tied to Greensill Capital and the numerous assignments performed across its investment banking, asset management and private banking units. Credit Suisse’s investment bankers advised the company on a pre-IPO raising and potential share market float late last year, while a bunch of Credit Suisse Asset Management investment funds played a key role in funding the supply-chain finance company. It was also involved in Sanjeev Gupta’s previous attempts to float Australian steel company InfraBuild, and was expected to be a contender to try to float the business again as early as this year. Regulator is keen to make sure that the bank had adequately prepared for any conflicts of interest that could arise. All Australian financial services licence holders are required to have such conflict management practices. It is understood the regulator also wanted to know what due diligence practices Credit Suisse had performed on Greensill, in its various roles.
A separate Financial Times Report revealed that a short selling hedge fund manager Mr John Hempton of Bronte Capital had written to the Australian Prudential Regulation Authority in November to flag Sydney based Insurance Australia Group’s exposure to Greensill. Mr Hempton also cited the risk held by Japan’s Tokio Marine, which in 2019 acquired IAG’s 50%stake in trade credit underwriter BCC, which had been the main underwriter to Greensill. He wrote “Both companies could be in a world of pain.” Mr Hempton shared the letter in a blog post, noting that “They asked me a few precise questions but gave me no indication as to whether they took these issues seriously or what they were thinking.”