Credit Suisse is suing SoftBank in London’s High Court as the bank steps up the pursuit of $440mn it claims its wealthiest clients are owed following the collapse of specialist finance firm Greensill Capital.
The formal launch of proceedings in London is the first legal action by Credit Suisse since the bank was taken over by rival UBS in a rescue deal orchestrated by Swiss regulators last month.
Clients of Credit Suisse were left with hundreds of millions of dollars of losses after investing in a suite of supply-chain finance funds tied to Greensill that the Swiss bank marketed as low risk. The losses were among the most damaging scandals to have hit Credit Suisse in recent years.
Credit Suisse served its claim against SoftBank in the High Court last week, according to people familiar with the matter.
The lawsuit centres on $440mn in funds that were owed to the Swiss bank’s customers by Katerra, a Californian construction company funded by SoftBank’s Vision Fund and also a client of Greensill. Katerra had received the money via the bank’s supply chain finance funds.
Late in 2020, SoftBank agreed an emergency cash injection into Greensill, which was intended to cover the debts at Katerra. The Financial Times has previously reported that the funds never reached the Credit Suisse funds.
In separate legal action in the US, Credit Suisse has alleged that SoftBank masterminded a financial restructuring of Katerra that benefited the Japanese group at the expense of the Swiss bank’s clients.
Credit Suisse declined on Wednesday to comment on the legal action in the High Court but said that it continued “to prioritise maximising recovery for investors in the supply chain finance funds”.
The High Court action against SoftBank is one of several unresolved legal cases that Credit Suisse is embroiled in. Analysts have estimated the bank could face up to $5bn of litigation charges over the next four years.
As part of its takeover of Credit Suisse, UBS negotiated a loss guarantee of up SFr9bn from the Swiss government.
The High Court claim marks an escalation in the bank’s legal fight after the company asked judges in California and Arizona in 2021 to compel Katerra to hand over documents relating to an agreement it struck with SoftBank in 2020. The bank also sought information on what SoftBank executives, including chair and chief executive Masayoshi Son, knew about the deal to bail out Katerra.
Credit Suisse has so far recouped $7.4bn of the $10bn clients invested in the Greensill funds, but attempts to pursue the rest are expected to take several years of court cases and legal claims.
In a statement, SoftBank said that “after more than two years of attempting to shift blame for its own poor investment decisions, Credit Suisse has finally made a claim — but, as expected, it is entirely without merit and will be defended vigorously”.
Credit Suisse is represented by Freshfields Bruckhaus Deringer in the case, while SoftBank has employed Quinn Emanuel. The latter is also preparing a lawsuit on behalf of Credit Suisse bondholders who will be wiped out as part of the bank’s rescue by UBS.