Credit Suisse “seriously breached its supervisory obligations” in its relationship with the disgraced financier Lex Greensill and his companies, the Swiss financial watchdog has ruled. The Swiss Financial Market Supervisory Authority (Finma) said it had concluded its enforcement proceedings against the bank, Switzerland’s second largest, after the collapse of Greensill Capital in March 2021. Greensill, which lent money to companies by buying their invoices upfront, collapsed after credit insurers withdrew cover, amid concern over its huge exposure to the steel and commodities tycoon Sanjeev Gupta’s GFG Alliance. Credit Suisse has been trying to recover $10bn (£8.2bn) of funds trapped in Greensill, as well as overhauling its risk management and compliance. The bank said it had recovered $7.4bn so far, including cash already distributed to investors and cash remaining in the funds. It added that it had a “clear strategic plan in place” that was being implemented by a new leadership team. The Swiss regulator said: “Finma finds that Credit Suisse seriously breached its supervisory obligations … with regard to risk management and appropriate organisational structures.” It noted that Credit Suisse had revised governance structures and strengthened control processes in the approval and monitoring of fund products. The regulator supports this, but ordered further measures. In future, the bank will have to periodically review at executive board level the most important business relationships – about 500 – in particular for counterparty risks. In addition, the bank is required to record the responsibilities of its approximately 600 highest-ranking employees in a responsibility document. They must be sanctioned by the bank “if they do not organise and manage their business area in such a way that misconduct is prevented as far as possible”, Finma said. Finma has also opened four enforcement proceedings against former Credit Suisse managers. It declined to reveal the identity of these ex-employees. They face a possible ban from the profession of up to five years. Credit Suisse said it had sacked several managers and employees since March 2021 and moved risk oversight into a dedicated divisional risk management function. Ulrich Körner, a former UBS executive who became chief executive of Credit Suisse last July after running the asset management division from April 2021, welcomed the conclusion of Finma’s work. “This marks an important step towards the final resolution of the supply chain finance funds issue,” he said. “Finma’s review has reinforced many of the findings of the board-initiated independent review and underlines the importance of the actions we have taken in recent years to strengthen our risk and compliance culture. We also continue to focus on maximising recovery for fund investors.” In March 2021, Credit Suisse closed four funds at short notice that were related to Greensill’s companies. Greensill, a charismatic Australian banker, had persuaded the Swiss bank, and fellow Swiss investor GAM, to plough billions of dollars into his supply chain financing business which promised to help companies and the public sector by speeding up payment of bills and wages. Greensill hired David Cameron as an adviser, with the former UK prime minister lobbying the government on his behalf. The risk of the funds was indicated as low in the client documentation. At the time of the closure, clients had invested a total of $10bn in the funds. Immediately after the closure, Finma started to investigate whether Credit Suisse had violated Swiss supervisory law in its business relationship with Greensill. Credit Suisse launched the first of the four funds in supply chain finance in collaboration with Greensill in 2017. Greensill acted as a financing company, securitised the claims and transferred the securities to the four Credit Suisse funds. Finma’s investigation showed that Credit Suisse’s asset management company “had little knowledge and control over the specific claims”. In fact, it was not Credit Suisse as asset manager of the funds that selected and reviewed them, but Greensill itself. Credit Suisse also left it to the latter to arrange the insurance cover in its own name. When Greensill told the bank that it was planning a stock market float with Credit Suisse and that it needed a bridging loan, the lender’s risk manager responsible for the loan identified a number of risks in the company’s business model and recommended internally at the bank not to grant the loan. However, a senior manager overruled this recommendation, Finma said. Credit Suisse also repeatedly relied on Greensill for its own statements.