|Bid||9.14 x 0|
|Ask||9.15 x 0|
|Day's range||9.10 - 9.22|
|52-week range||6.18 - 13.80|
|Beta (5Y monthly)||1.60|
|PE ratio (TTM)||5.55|
|Earnings date||29 Oct 2020|
|Forward dividend & yield||0.14 (1.58%)|
|Ex-dividend date||07 May 2020|
|1y target est||16.24|
(Bloomberg) -- Two months ago, Credit Suisse Group AG overhauled a group of funds it runs with Lex Greensill’s eponymous firm to end an unusual arrangement with a large investor that had sparked concerns about conflicts of interest.Turns out, that wasn’t the only relationship in the multibillion-dollar strategy that may have been somewhat out of the ordinary.One of the funds had also extended more than $15 million in loans to a small company run by Greensill’s neighbor in Cheshire, England, according to a review of its most recent report, dated April. The company, Special Needs Group, provides services for people with learning disabilities and is run by Barnabas Borbely, whose property is next to the home of the Greensill founder.The unconventional loans stand out for several reasons: In addition to the fact that Borbely is Greensill’s neighbor, the company is too small to file public financial statements and a key part of the business -- a school for children with learning disabilities -- is only just getting off the ground. Some of the loans appear tied to real estate rather than typical supply chain assets. Greensill says that it uses real estate as extra security for loans that it makes to some of its customers.“It’s surprising that a $9 billion group of funds engaged in supply chain finance would be dealing with such small enterprises,” Steve Clapham, founder of London-based research firm Behind the Balance Sheet. “It’s hard to envisage how such a company would repay the debt, nor how it would even have that size of purchases.”A spokesperson for Credit Suisse declined to comment on the loans. The fund, Credit Suisse Nova (Lux) Supply Chain Finance High Income Fund, has since exited the loans and no longer holds any of them, according to people familiar with the matter.Unlike other supply chain finance strategies that Credit Suisse runs with Greensill, the High Income fund does not use trade credit insurance on all of its assets to cover defaults.Credit Suisse’s family of supply chain funds has already been in the spotlight this year. The Swiss lender kicked off an internal probe into the funds after the Financial Times reported on a complicated network of relationships involving Greensill and a key investor, SoftBank Group Corp. The probe concluded in July with Credit Suisse revamping its investment guidelines for the funds, including the High Income Fund. The bank said at the time that no clients had suffered losses, and that the overhaul was intended to “further protect the interests of all” investors in the funds.While the investment in Special Needs was relatively small compared with the more than $1 billion that the High Income Fund oversees, it underscores the pitfalls of a model that effectively relinquishes the responsibilities of traditional fund managers and largely delegates that job to Greensill Capital.Greensill sources the assets -- mostly invoices it buys from suppliers at a small discount -- packages them into notes and passes them on to the fund through a warehousing agreement, as long as they meet certain parameters. The structure effectively lets the seller of assets decide what the fund buys.‘Valued Client’Greensill said in a statement that Special Needs Group remains a valued client of the firm and passed “rigorous credit and risk assessments.”“SNG is a great example of a company that can get fairer access to finance thanks to Greensill’s ability to assess and price risk objectively based on current and future cash flows from reliable partners and clients with strong credit ratings, rather than solely on historic performance,” Divya Eapen, Deputy Chief Risk Officer at Greensill, said in an emailed statement.“Serving small businesses that deserve lower cost finance in this way gets cash into the real economy where it is needed most,” Eapen said. “We fully support the good work SNG is doing and look forward to continuing our partnership.”Special Needs Group referred to a new post on Greensill’s website that describes its business and says Greensill uses “fintech to identify and factor in future cash flows” when financing companies.The High Income fund is the riskiest in a group of supply-chain finance products Credit Suisse runs with Greensill, a strategy that has produced steady gains from short-term debt at a time when money market returns are close to zero. The fund gained 5.2% annually since inception in 2018, and 5.5% over the past year, putting it in the top of its peer group, according to data compiled by Bloomberg.Liquid AlternativeClassified as a liquid alternative fund, the High Income fund can employ leverage to amplify returns and clients can get their money back monthly, with 10 business days notice. Because the assets it holds are rarely traded, the fund produced very little volatility, even as at least three companies it helped finance defaulted in the past year. The fund managed to avoid losses because the assets were either no longer held at the time of default, or Greensill agreed to take the hit.Investor demand for such steady returns in short-term debt has been strong until recently. In November of last year, the fund was forced to close to new money because it couldn’t find enough new investments. It reopened in March after the onset of the pandemic led to outflows.The complexity of matching investor demand to supply underscores the challenges for an investment strategy that searches for yield in the often opaque area of invoice-based financings. Because these loans are typically small and mature quickly, finding enough assets from a diverse group of borrowers can be difficult, particularly for a young firm such as Greensill Capital.Especially in the early years, the firm relied heavily on financing companies tied to British-Indian entrepreneur Sanjeev Gupta. That relationship has since attracted scrutiny from regulators, with German authorities examining a bank Greensill owns in the country over its exposure to Gupta-linked assets, Bloomberg has reported.Through the Credit Suisse funds, Greensill had also financed a large number of companies in which Masayoshi Son’s SoftBank Vision Fund owns equity stakes. SoftBank is also a large backer of Greensill and it had put hundreds of millions of dollars into the Credit Suisse funds, effectively allowing it to prop up its own investments through the fund.When Credit Suisse investigate those relationships, it found that 15% of the debt held by the funds was tied to companies in which the Vision Fund also owned equity stakes, and that SoftBank had struck an agreement with three of the funds to ensure that they would only invest in Greensill-sourced assets.That deal has since been canceled and SoftBank pulled about $700 million from the funds. Credit Suisse said it would change its investment guidelines to reduce the maximum exposure to a single borrower. A spokesman for the bank declined to say whether the Special Needs loans were sold in the wake of that probe as well or whether the fund exited them for different reasons.‘Funding Solutions’While many of the assets in the fund are tied to large companies such as Vodafone Group Plc, Special Needs Group is different. It comprises businesses that provide services for people with disabilities and own properties in Chester, near Greensill’s and Borbely’s homes in north-west England. It also owns a nascent school for children with learning disabilities, which is due to commence its first term this fall, according to its website.The school and the group advertise that they work with an “innovative finance company” and can provide “attractive funding solutions.” Greensill, in a post on its website, said the school will eventually cater to 75 children and should operate at full capacity by the spring of next year.“In essence, Greensill is able to use fintech to identify and factor in future cash flows from local authorities and central government to their suppliers rather than working with historical data,” it says in the post, dated Sept. 14.Credit Suisse held around $15.7 million of loans to Special Needs Group in the High Income fund as of the end of April, including loans dated 2021. A Greensill spokesman said the loans had a maturity of 180 days, which was “not atypical.”While the fund disclosures don’t reveal the nature of the borrowings by Special Needs, Companies House records show the group had short-term debt of 7.2 million pounds as of January 2019, its latest available financial accounts. The only lender on record is Greensill Capital, which provided a loan to the company for an undisclosed amount in 2018, and a separate mortgage secured against the lease of the site of the nascent school in May 2020, the filings show.In the last two years, Greensill Capital also provided loans backed by real estate assets near Chester to Essential Property (NW) Ltd., a real estate firm owned by Special Needs Group. The company reported 3.1 million pounds of short-term debt in January 2019, according to the filings.“It is entirely appropriate for Greensill to hold real estate as security for certain asset classes and we do that wherever possible”, a spokesman for Greensill said. “In structuring assets in this way we mitigate risk yet further.”(Updates with High Income insurance details in 7th paragraph)For more articles like this, please visit us at bloomberg.comSubscribe now to stay ahead with the most trusted business news source.©2020 Bloomberg L.P.
The chairmen of UBS and Credit Suisse supported a merger of equals between Switzerland's two largest banks during discussions earlier this year, Swiss magazine Bilanz reported on Wednesday, adding talks had since stagnated. The details reported by finance periodical Bilanz suggest that a merger between Credit Suisse and UBS, which had been examined by staff working under UBS chairman Axel Weber in recent months, had been more seriously considered than previously known, receiving backing from both parties. Both UBS and Credit Suisse declined comment.
(Bloomberg) -- A battle for financial talent is intensifying in China, one of the few places worldwide where global banks are firmly in hiring mode.Credit Suisse Group AG this month hired a dozen analysts in China, almost half of whom used to work at UBS Group AG. UBS has scooped up more than 40 people from global and local firms. Morgan Stanley has moved a team to the mainland and hired about 20, but also saw six bankers walk out the door, some to local brokers. Along with Goldman Sachs Group Inc., most foreign firms are seeking to double their headcounts over the next few years.The hiring follows China’s historic opening of its financial sector and stands in contrast to much of the world, with global banks announcing jobs cuts this year exceeding 63,000, on track for the deepest retrenchment since 2015. The industry’s biggest players are betting there’s billions to be made in China on everything from merger advice to stock underwriting and trading -- if they can find the right people.“There’s definitely a talent war between some of the big global banks,” said Sid Sibal, a Hong Kong-based regional director at recruitment firm Hudson. “In China, there’s a finite amount of talent that one can poach from big investment banks, so they’re going to have to think out of the box.”Credit Suisse has hired top ranked analyst Alex Liu and Tracey-Ruth Sun from UBS to lead its research operations. Last year it snapped up UBS’s then head of research, Erica Poon Werkun. The firm pushed out about 30 bankers at the joint venture in July to make room for fresh talent, a person familiar has said.Beefing up research is becoming crucial as China opens its markets to lure more foreign inflows. It last year scrapped limits on overseas purchases of stocks and bonds and eliminated approvals for quotas. Foreigners hold only 4.7% of Chinese stocks in circulation, way below the more than 30% in markets like Japan and South Korea, according to the China Securities Regulatory Commission.UBS is also on the prowl. The Swiss bank has recruited about 200 people this year, including 44 bankers, analysts and support staff from at least five brokerages, including Credit Suisse, a spokesman said. UBS transferred managing director Grace Chen from Hong Kong to Beijing to head technology, media and telecommunications banking.U.S. behemoth Morgan Stanley has seen a churn of bankers. After previously flying executives in and out of Shanghai over the past years to right its money-losing joint venture it has now installed its own personnel in top positions. The firm this year moved seven executives to its China venture, in addition to hiring 20 bankers and research analysts, a person familiar said.Deal FlowsBut it was also hit by departures, with some leaving for China International Capital Corp., underscoring the difficulties foreign banks face. Morgan Stanley lost six bankers at its China venture recently, including two executive directors and another banker who worked on its biggest deal this year, people familiar said. That was in part after it failed to pay bonuses to some executives and bankers but also due to lower deal flows, problems faced by its global rivals as well, the people said.Morgan Stanley this year ranks first among foreign brokers in China after helping arrange the initial public offering of Semiconductor Manufacturing International Corp. the largest ever on Shanghai’s Star board, but it lags far behind local rivals such as CICC.Spokeswomen of UBS, Morgan Stanley and Credit Suisse declined to comment.Analysts and bankers say that Chinese brokers offer a faster chance at advancing. While an analyst with three years experience could become a sector chief at a local broker, it takes much longer to climb the ladder at a foreign firm, according to one executive who has worked for both. Stricter compliance at foreign banks is another hurdle. Local brokerages, for example, are allowed to co-invest in Star Market deals they handle, a potentially lucrative practice that is heavily scrutinized at foreign firms.While it’s still hard to compare compensation difference between local and foreign firms, in part because global banks are just getting started, the newcomers are offering at least a 20% bump up to lure candidates for senior roles, said Eric Zhu, head of financial services recruitment at Morgan McKinley. Campus recruitment by foreign firms has grown by double-digits from two years ago, he said.Some local firms are taking note and adjusting their compensation structure to be more in line with global practice by offering a greater part in fixed salary to graduates and junior hires, he said, but cautioned that recruiting in China is about more than just pay.“Compensation isn’t the most important factor,” he said. “Foreign companies don’t have much status here, you have to tell a very compelling story for people to be interested.”HeadhuntedThere’s also the lure of work outside of banking. A senior banker who left Morgan Stanley’s joint venture this year said he was headhunted by about four corporates. Demand for bankers is climbing as China loosens rules in its capital markets, making it easier to raise funds and go public. While compensation isn’t as high, the lure of stock options is palpable, he said, declining to be named discussing a private matter.But global banks are now betting their expanding investments and increased control will translate into climbing market share, making them a bigger magnet for talent.Thomas Fang, head of China global markets at UBS, estimated earlier this year that China’s brokerage industry will generate revenue of $100 billion by 2025, with foreign capital grabbing 25% of the pie.Read more: Credit Suisse Plans to Double China Headcount in Five Years (3)Just based on the stated hiring plans by Goldman, UBS and Japan’s Nomura Securities, they will need to find at least a 1,000 people over the next few years. JPMorgan Chase & Co. has been quiet about its hiring plans, but is expanding by a third its office space in China’s tallest skyscraper in Shanghai’s business district. Credit Suisse CEO Thomas Gottstein said on Tuesday the bank plans to double its number of relationship manager in the Asia, as it’s rolling out onshore wealth management in China.”It’s not 10, 20 staff anymore,” said Sibal. “When you have that level of demand you have to broaden your search.”(Adds Credit Suisse to roll out wealth platform in penultimate paragraph.)For more articles like this, please visit us at bloomberg.comSubscribe now to stay ahead with the most trusted business news source.©2020 Bloomberg L.P.