Evergrande was a Credit Suisse “One-Bank” client

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The Swiss bank would have opted for Evergrande as well as its billionaire president, while UBS would assume a bond exposure.

Zurich-based Credit Suisse has gone from hot to cold on the now besieged property developer at the center of an economic maelstrom, the “Financial Time(behind the paywall) reported on Friday.

Above all, the Swiss lender’s wealth managers as well as investment bankers were sniffing the Shenzhen-based company for doing business, the outlet reported.

Ultra-rich client

There is little doubt why: Evergrande President Hui Ka Yuan withdrew $ 8 billion in cash dividends from Evergrande since the real estate company’s IPO in 2009, “ForbesCalculated Thursday.

This would give him and the company a clear picture of the kind of ultra-wealthy client that Credit Suisse’s private bankers, as well as the capital markets arm, would be looking for.

Hit the brakes

unlike others recent and outstanding examples, Credit Suisse appears to have put the brakes on in time to avert another massive financial blow. Crosstown’s rival UBS did not back down in time: its clients are sitting on losses on Evergrande bonds, the outlet reported.

Credit Suisse has gone from being the company’s largest bond issuer outside of China over the past decade to no longer underwriting any debt products due to concerns about its financial condition, the book reported. pink.

Thursday, the bank said has no credit exposure to the indebted company, but that its the asset management arm maintains minor investments.

Circular loan?

In 2018, Hui asked Credit Suisse private bankers for a loan against collateral linked to Evergrande. It was later turned down by senior management, according to the “FT”, because it carried the characteristics of circular financing. A spokesperson for Credit Suisse did not comment on Hui.

From that point on, Credit Suisse investment bankers also began looking to move away from Evergrande, the outlet reported, although Hui appears to have stuck with his wealth management arm as customer.

The Chinese firm and Hui are the latest examples of the “Bank” type business that Credit Suisse has cultivated – sometimes with disastrous consequences.

Political hot potato

Admittedly, the Swiss bank was not the only bondholder on Evergrande: the outlet reports that UBS and BNP Paribas also issued debt for the company.

Evergrande, who was born out of China’s mass urbanization trend, missed a key US dollar bond payment on Thursday and became a political hot potato for Beijing.

Coping with losses

UBS as well as HSBC and BlackRock face losses according to the newspaper because they added to Evergrande’s holdings shortly before bond prices collapsed.

Ralph Hamer, CEO of UBS, said Thursday he relies on the Swiss wealth manager’s exposure to Evergrande, noting that he called some margin on the show – it’s unclear who – and that this was “well executed”.

A spokesperson for UBS reiterated that Hamers had called his exposure to the problem “intangible”.


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