Credit Suisse Files Suit Against SoftBank in London High Court

Credit Suisse Files Suit Against SoftBank in London High Court

Credit Suisse has filed a suit against SoftBank in London’s High Court. As the bank intensifies its pursuit of the $440 million it alleges its wealthiest clients are owed as a result of the failure of specialized financing company Greensill Capital.

Since the bank was acquired by competitor UBS in a rescue package arranged by the Swiss government last month, Credit Suisse has taken no legal action until now, when it formally started proceedings in London.

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 one of the most destructive scandals to affect Credit Suisse in recent years and contributed to the uneasiness that infected the bank’s investors, clients and counterparties and accelerated the bank’s downfall.

Credit Suisse served its claim against SoftBank in the High Court last week.

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.”

Katerra, a Californian construction firm backed by SoftBank's Vision Fund and a client of Greensill, is accused of owing the Swiss bank's clients $440 million, being the focal point of the lawsuit.

Katerra had received the money via the bank’s supply chain finance funds. In late 2020, SoftBank agreed an emergency cash injection into Greensill, which was intended to cover the debts at Katerra. However, the money never reached the Credit Suisse funds.

Credit Suisse claims that SoftBank orchestrated a financial reorganization of Katerra that benefitted the Japanese business at the expense of the clients of the Swiss bank in a separate civil case in the US.

The High Court action against SoftBank is one of several unresolved legal cases in which Credit Suisse is embroiled. 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 recovered $7.4 billion of the $10 billion that clients invested in the Greensill funds, but attempts to pursue the rest are expected to take several years of Court cases and legal claims.

Credit Suisse is represented by Freshfields Bruckhaus Deringer in the case, while SoftBank has employed Quinn Emanuel.

The company is already preparing a suit on behalf of holders of Credit Suisse bonds which will be wiped out in the bank rescue by UBS.