Horses without riders strewn across a frozen lake in the alpine resort of St. Moritz, men’s faces snowing on sleds pulling behind them.
In February last year, weeks before public events across Switzerland were canceled due to the coronavirus, Credit Suisse relocated its dear clients to the White Turf – a more than century-old equestrian event that the Swiss bank has sponsored for the “skateboarding” race Uniquely dangerous. contracts.
While the seven brave skaters risked their lives at the Credit Suisse Grand Prix, one guest watched the bank’s biggest threat: British steel magnate Sanjeev Gupta.
Today, Gupta’s sprawling GFG Alliance is reeling after the collapse of its largest lender Greensill Capital. The minerals group is also under investigation from the UK’s Serious Fraud Office. It denies any wrongdoing.
It is known that Credit Suisse indirectly exposed Gupta via Greensill, which combined the loans into banknotes obtained by Swiss bank funds. When Grencelle collapsed in March, Credit Suisse faced the reality that a large sliver of debt could go bad, including loans to GFG.
But what was not widely known until now is that Credit Suisse also has an important direct relationship with Gupta.
A series of former Swiss bank executives revealed to the Financial Times how private bankers and global leadership treated the metals tycoon, offering him a VIP treatment that extended beyond the trip to St Moritz.
Forming a deep relationship with the Indian-born industrialist, Credit Suisse ignored warnings from concerned corporate clients and bankers.
The revelation that Credit Suisse has handed over to Gupta everything from a mortgage on a memorial mansion to a private audience with its then-CEO, will further anger its clients who face billions of dollars in losses.
Some of these clients are expected to sue Credit Suisse, alleging failures in the way the funds were managed. Grensell’s troubles come as the bank grapples with yet another risk management scandal over his work with Archegos, the collapsed family office.
“The decision to finance entrepreneurs such as [Gupta] “At any cost it was a wrong decision,” said one former senior executive of the bank’s business in Australia, who cited unease about loans to Gupta as the reason for his resignation. “It was a lot of capital going into a precarious situation,” the banker added.
Credit Suisse and GFG declined to comment.
Five star treatment
After spending years wooing Sanjeev Gupta, Credit Suisse filed for divorce at the end of March, petitioning courts in the UK and Australia to put several of his core businesses into bankruptcy.
With $1.2 billion to recover on behalf of angry clients, the Swiss bank has other tools at its disposal. Some of Greensell’s Gupta debt facilities have benefited from personal guarantees, according to people familiar with the terms, which could allow creditors to go after the so-called “Man of Steel” for himself.
To that end, Credit Suisse recently appointed Kroll private investigators to trace Gupta’s origins around the world, according to three people familiar with the matter.
While Gupta went on a half-decade corporate buying spree that built a metals conglomerate with 35,000 employees, he’s also amassed a personal collection of Cup Origins. Brilliant purchases ranged from a private jet and helicopter with identical signs, to a large London home worth £42m – owned in his wife’s name.
Credit Suisse wouldn’t need the services of Kroll for intelligence on other luxury homes in Gupta: a 19th-century sandstone mansion overlooking Sydney Harbour.
“They were proud of it,” said the former CEO. “The pursuit of subprime mortgages in Australia was a key strategy.”
Helping Gupta buy the A$35 million (US$27 million) home, owned through a fund overseen by an Australian stockbroker friend, was just one part of the service Credit Suisse provided as his own wealth manager.
The Swiss bank also managed the fortune of Lex Greensell, the 44-year-old Australian founder of Greensell Capital, who was a paper billionaire before his eponymous financial company collapsed.
Controversial businessmen’s wealth management was part of Credit Suisse’s plan. Hellmann Situhang, the bank’s longtime head of the Asia Pacific region, has built a franchise serving the region’s richest businessman, while also adopting some reputational risk.
“We position ourselves as a bank for entrepreneurs,” Situhang said in February, days before Greensell Capital collapsed. “In Asia, this situation has resonated well with us.”
Gupta and Grensell even shared the same private banker at Credit Suisse: Shane Galligan, one of Situhang’s biggest raincoats, who made it his job to manage money for Australia’s richest businessman.
“If you look at the strategy in Asia in terms of supporting ultra-high net worth clients, nobody is bigger than them in private banks,” said another former Credit Suisse banker. “He covers billionaires. That was his thing.”
Galligan emphasized that Gupta had a full five-star Swiss banking experience. In addition to inviting the steel magnate to a horse racing event in the Alps, in 2019 he brokered a coveted meeting with then-CEO Tidjan Thiam.
Galligan and Sitohang have been instrumental in dispelling concerns about the bank’s growing tangles with Gupta and Grensell, according to former Credit Suisse bankers. A person close to the bank said Situhang was not close to Gupta or Greensell.
A former executive recalled the last internal call in 2020 between Galligan, Lara Warner — the chief risk and compliance officer until she left after Grensell and Archus Viaskos — and a handful of other bankers to discuss the growing risks surrounding her business with Greensell.
“There was no sensitivity or appreciation of the dimensions of the risk,” he said. “The tune was purely, ‘We want to fund this entrepreneurial client. “
Credit Suisse said Situhang and Galligan declined to comment.
Trip to Zurich
In February 2020, the same month that Credit Suisse welcomed Gupta to St Moritz, British banking regulators contacted the San Francisco International Office. interests About his family’s conglomerate of opaque minerals for finance.
Then the Swiss bank received a stark warning. In July 2020, Commodity Trader Trafigura warned Credit Suisse The bank’s supply chain funds appear to contain a suspicious invoice from Gupta’s business empire. The warning came while the bank was in the middle of a year internal audit of funds, raised by the Financial Times reports on unusual relationship With Greensill contributor SoftBank.
However, not only did Grensel-linked funds lend Gupta, Credit Suisse considered offering its own balance sheet to the steel magnate as well.
In October 2020, Gupta revealed a plan to take control of one of Germany’s oldest – and most emblematic – industrial interests: the 200-plus-year-old Thyssenkrupp steelmaking unit.
When steel pole Unveiling the bold bid, has not yet committed to debt financing, but he has letters of support from two familiar financial institutions in his pocket: Grencelle and Credit Suisse.
Support for Thyssenkrupp’s view was not alone. Another former senior executive said Credit Suisse’s investment banking division was “outdated” at GFG, lured by potential fees into a seemingly endless string of deals, after it also won an authorization over the long-awaited listing of its InfraBuild business in Australia .
However, the fees never came. Both deals collapsed earlier this year as Greensell began to unravel and threatened to bring down GFG with her.
Grencel’s fate was decided last weekend in February, when Credit Suisse made the decision Freezing their $10 billion scale From supply chain finance funds, after they discovered the expiration of a major insurance contract supporting the billing securitization machine.
On the Friday before this fateful decision, Gupta traveled to Zurich with his loyal lieutenant Jay Hambro, descendant of a British banking dynasty. Twelve months after the Steel Baron enjoyed Credit Suisse hospitality at the White Turf, the Swiss lender’s palatial residence at Paradeplatz entered a very different reception.
Gupta and Hambro pressured the bank not to withdraw the funds, according to people familiar with the discussions.
But this time, Credit Suisse wasn’t ready to take in a client who was so valuable.
Additional reporting by Owen Walker and Stephen Morris