Credit Suisse–Greensill Saga: A Case of Risk Management Failure

Abstract

This article has focused on Greensill, the financial technology start-up, till its untimely closure in March 2021. Greensill’s original business model was built on providing traditional supply chain finance to business, but additionally, it packaged and sold these loans as ‘safe’ investments to various institutional investors through Credit Suisse, the 165-year-old Switzerland-based private bank. In order to grow at an exponential rate to support its high valuation, Greensill adopted various high-risk, questionable business practices. But its principal partner during this journey, the veteran bank officials of Credit Suisse, was either blissfully unaware of the wrongdoings or chose to ignore it. As Greensill collapsed, the bank paid a high price for this oversight in terms of monetary and reputational damage. The case has chronicled how the bank’s top officials in order to pursue the bank’s ‘integrated bank platform strategy’ chased short-term profit and turned a blind eye to all rules of due diligence and risk management. Though the bank made superficial changes in its process and appeared retrospective after the debacle, it remains to be seen whether its measures would translate into something concrete to make the supply chain finance domain safer and sustainable.