LONDON (Reuters Breakingviews) - Credit Suisse’s history of financial scandal contains a lesson for its Greensill Capital predicament. After the 2008 crash, the bank paid bosses’ bonuses in instruments linked to risky assets acquired during the preceding boom. Reviving the Partner Asset Facility (PAF) offers a way to share the pain with investors in funds linked to the collapsed supply-chain financier. The funds, which had about $10 billion of assets when they were suspended at the start of March, contain $3 billion of dodgy loans, the Financial Times reported on Thursday. The lion’s share are owed by steel magnate Sanjeev Gupta’s GFG Alliance and coal miner Bluestone Resources. Credit Suisse expects actual losses, after factoring in recoveries and insurance payouts, may be as low as $1 billion. ADVERTISEMENT It’s a thorny dilemma for Chief Executive Thomas Gottstein. Doing nothing would mean passing the losses to fund investors who could in theory get back just 70 cents to 90 cents on the dollar. That risks souring relationships with important corporate and wealthy clients, who thought they were buying a cash-like product. Inevitable lawsuits mean any recovery could take years. That’s why the bank may shoulder 50% of the burden, Reuters reported on Thursday. Absorbing half of the potential $1 billion to $3 billion of losses could knock 17 basis points to 51 basis points off its common equity Tier 1 capital ratio, which stood at 12.9% at the end of December. The problem with that plan is that supervisor FINMA may also force Gottstein to hold more equity against future missteps. There’s a third way: make Credit Suisse’s senior staff eat their own cooking. A PAF-style vehicle could buy troubled assets from the fund’s investors. Executive board members and senior managers in the asset and wealth management businesses would receive units in the PAF fund in lieu of bonus payments, effectively landing them with the risk that credit insurers which insured the Greensill assets refuse to pay out. Another option would be to structure cash flows from the dodgy assets like collateralised loan obligations – a specialism of Credit Suisse’s bankers. Fund investors would have first dibs on any recoveries, with the riskier tranches held by the bank and its high-ranking employees. Aside from the pleasing karma of such an arrangement, it might smooth relations with angry fund investors. Credit Suisse’s structured finance nerds have a shot at retribution. BREAKINGVIEWS Reuters Breakingviews is the world"s leading source of agenda-setting financial insight. As the Reuters brand for financial commentary, we dissect the big business and economic stories as they break around the world every day. A global team of about 30 correspondents in New York, London, Hong Kong and other major cities provides expert analysis in real time. Sign up for a free trial of our full service at https://www.breakingviews.com/trial and follow us on Twitter @Breakingviews and at www.breakingviews.com. All opinions expressed are those of the authors.