How Credit Suisse fascinated Sanjeev Gupta before she had a rough divorce

Horses without cyclists rumbled across the icy lake in the village of St Moritz in the Alps, throwing snow on the faces of men on skis dragged behind them.

In February last year, public events across Switzerland were coronavirus and, before being canceled a few weeks earlier, Credit Suisse took its most precious customers to White Turf – a century-long equestrian event where the Swiss bank had a dangerous “skijoring” race. decades.

While seven fearless skiers risked their lives at the Grand Prix Credit Suisse, he was one of the guest caretakers who posed the biggest threat to the bank: British steel mogul Sanjeev Gupta.

Today, Gupta’s large GFG Alliance conglomerate is operating after the fall of Greensill’s largest capital lender. The metal band is also being investigated at the UK’s most serious fraud office. He refuses to make a mistake.

It appears that Credit Suisse had indirect exposure to Gupta through Greensill, which packaged the loans in notes obtained from Swiss bank funds. When Greensill collapsed in March, Credit Suisse predicted that a large portion of the debt could be bad, including loans to GFG.

What was not very well known so far, however, is that Credit Suisse has a direct relationship with Gupta.

A former executive of the Swiss lender has revealed to the Financial Times how his private bankers and world leaders have teased the metal tycoon by offering VIP treatment that extended beyond the trip to St Moritz.

Creating a deep relationship with the Indian-born industrialist, Credit Suisse has ignored the warnings issued to concerned corporate customers and its bankers.

Credit Suisse’s disclosure of the Guptari trophy mansion’s mortgage and the then-chief executive of the hour will further anger customers with potential billions of dollars in potential losses.

Some of these clients will sue Credit Suisse for failing to manage funds. And Greensill’s problems are being removed by the bank because of another risk management scandal with Archegos over the work done by the fallen family office.

“It’s like a decision to fund entrepreneurs [Gupta] it was a wrong decision at all costs, “said the bank’s former top Australian business official, citing unease over loans to Gupta as a reason for his resignation.

Credit Suisse and GFG declined to comment.

Five star treatment

After years of Sanjeev Gupta, Credit Suisse filed for divorce in late March, applying to the courts in the UK and Australia to put its main business into bankruptcy.

To recover $ 1.2 billion on behalf of angry customers, the Swiss bank has other tools at its disposal. Some of Greensill’s Gupta’s debt facilities secured personal guarantees, according to people who knew the terms, as creditors would allow the so-called “man of steel” to repel him.

To that end, Credit Suisse recently hired private investigators in Kroll to search for Gupta’s assets around the world, according to three people who know the subject.

While Gupta built a metal conglomerate with 35,000 employees in the mid-decade of corporate shopping, he also collected a personal collection. trophy assets. Excellent purchases from a private jet and a helicopter, with signs of a vanity tail, reached a large London house worth 42 million euros in the name of his wife.

Credit Suisse will not need Kroll’s services for the minds of Gupta’s other luxury homes: the century-old sandstone mansion overlooking Sydney Harbor.

“Credit Suisse gave me a mortgage. They were proud, “the former executive said.” Going after Australian super-mortgages was a key strategy. “

Helping Gupta buy a $ 35 million ($ 27 million) home, owned by a trust overseen by an Australian stock exchange friend, was just one part of the service offered by Credit Suisse as its private wealth manager.

The Swiss bank also managed the wealth of Lex Greensill, the 44-year-old Australian founder of Greensill Capital, who was a paper billionaire before the collapse of his eponymous financial company.

Managing the wealth of controversial companies was part of Credit Suisse’s plan. Helman Sitohange, the bank’s longtime head of Asia-Pacific, built a franchise for the region’s richest businessman, taking on a number of reputable risks.

“We’re positioning ourselves as a bank of entrepreneurs,” Sitohange said in February, just days before Greensill Capital exploded. “This Asian location has resonated very well for us.”

Gupta and Greensill shared the same private bank with Credit Suisse: Shane Galligan, one of Sitohang’s largest rainmakers, was tasked with managing money for Australia’s wealthiest tycoons.

“If you look at the strategy of supporting very high net worth customers in the Asian strategy, no one is bigger than him in private banking,” said Credit Suisse, a former second banker. “It covers billionaires. That was his thing. “

Galligan assured that Gupta had received the full five-star banking experience in Switzerland. In addition to inviting steel mogul to the Alpine horse races, in 2019 he chaired a coveted meeting with the bank’s then-CEO Tidjane Thiam.

Former banks at Credit Suisse reported that Galligan and Sitohange were instrumental in dispelling concerns about the bank’s link to Gupta and Greensill. A person close to the bank said Sitohang was not near Gupta or Greensill.

Another former executive recalled an internal call in 2020 between Galligan, Lara Warner – the main risk and compliance manager until he left following the Greensill and Archegos fiascos – and a few other bankers to discuss the growth risks of his business with Greensill.

“There was no sensitivity or assessment of the risk dimension,” he said. “The tone was pure: ‘We want to bank on this entrepreneurial customer.’

Credit Suisse has said it wants Sitohang and Galligan to resign.

Flight to Zurich

In February 2020, the same month that Credit Suisse took over Gupta St Moritz, British regulatory banks contacted SFO worries about his family’s financial opaque metal conglomerates.

Then the Swiss bank received a strong warning. In July 2020, the commodity trader Trafigure has warned Credit Suisse the bank’s supply chain financing funds appeared to have a suspicious bill for the Gupta company empire. The warning came when the bank was in the middle of a bank internal review FT funds unusual relationship With Greensill’s SoftBank shareholder.

However, the funds associated with Greensill not only provided loans to Gupta, it also thought Credit Suisse would offer its balance sheet to the steel magnate.

In October 2020, Gupta unveiled a plan to control one of Germany’s oldest and most symbolic industrial concerns: Thyssenkrupp, a steel unit more than 200 years ago.

When a steel tycoon he presented a bold offer, had not yet made any debt financing, but had letters of support from two well-known financial institutions in its pocket: Greensill and Credit Suisse.

Supporting Thyssenkrupp’s offer was not sudden. Another former senior official said Credit Suisse’s investment banking division was “full” of GFG, attracted by the seemingly endless share of deal chains, as Australia also won a mandate on its InfraBuild business listing. .

The quotas never arrived, however. Both deals fell through earlier this year as Greensill began to disband and threatened to take GFG with him.

Greensill’s fate closed in the last weekend of February, when Credit Suisse made its decision freeze the $ 10 billion range the supply chain financing fund invoices, knowing that the key insurance contract on which the invoice securitization machine was based had expired.

On the Friday before that tragic decision, Gupta flew to Zurich with his loyal lieutenant Jay Hambro, The skier of the British dynasty bank. Twelve months after the steel baron enjoyed Credit Suisse’s hospitality at White Turf, the Swiss lender’s headquarters at Paradeplatz had a very different reception.

According to people familiar with the discussions, Gupta and Hambro pressured the bank not to pull the plug on the fund.

This time, however, Credit Suisse was not ready to take on a highly valued customer.

Additional reports by Owen Walker and Stephen Morris