Credit Suisse disputes SoftBank founder Masayoshi Son’s version of a controversial deal the Japanese group has entered into with Greensill Capital, as once close ties between the companies become increasingly bitter.
The Swiss bank legal action launched last month in the US, more than $ 440 million is owed to its wealthy customers by Katerra, a California construction group backed by SoftBank’s $ 100 billion Vision Fund and also a customer of supply chain financing group Greensill.
The dispute centers on an emergency cash injection that SoftBank agreed to in late 2020 to give Greensill, who was borrowing struggling Katerra money, what he originally borrowed from Credit Suisse customers.
As part of the deal, Greensill agreed to write off Katerra’s debt in exchange for a small stake in the construction group, which continued to filed for bankruptcy last June. The Financial Times revealed last year that the $ 440m never reached cash from SoftBank the Swiss bank’s customers.
Credit Suisse claims in US submissions that SoftBank has mastered a financial restructuring of Katerra that has benefited the Japanese group at the expense of the bank’s customers.
According to the filings, Credit Suisse claims a “substantial discrepancy” between what it says Son’s denial of “all knowledge of the Katerra” deal was in a meeting last September with the bank’s CEO, Thomas Gottstein, and a mail sent by Lex Greensill. December 2019 indicating that the SoftBank boss gave it his blessing.
A portion of Greensill’s email sent to the firm’s staff and quoted in the filings states that “Masa personally looked into the matter and gave me his personal commitment that the guarantee would be issued. . . (I did it now and Masa was explicit about his support.)
Credit Suisse also claims that Greensill, the founder of the now defunct finance firm, made a presentation to Son in October 2020 where he discussed the Katerra restructuring, it appears from the filings.
“In light of these facts, Mr Son’s position in his meeting with Mr Gottstein is surprising and requires explanation,” according to a letter from the Swiss bank to SoftBank quoted in the filings. “On the face of it, it is clear that the Katerra program has had the support and involvement of the most senior levels of management at the SoftBank entities.”
Last year’s meeting was set up by Credit Suisse to discuss broader relations between the two groups, according to people briefed on Son’s involvement, and the SoftBank chief was unwilling to answer detailed questions about Katerra.
Yoshimitsu Goto, SoftBank’s CFO, was also present at the meeting, along with Helman Sitohang, head of Asia-Pacific at Credit Suisse, and Ulrich Körner, head of the bank’s asset management division, the people said.
The submissions made by Credit Suisse were part of its application last month in the US for permission to obtain further documents and communications exchanged between SoftBank and Katerra, as well as minutes of Katerra board meetings. A California judge gave the bank permission last week, and SoftBank has 30 days to respond to any requests once they are received.
The Swiss bank intends to use these documents as proof that SoftBank’s senior executives, including Son, were aware of the Katerra agreement in a lawsuit they expect to file in London in the coming weeks, according to people familiar with the matter. with the bank’s plans.
“Credit Suisse has threatened to sue SoftBank for the past six months, but has not done so – for the simple reason that it has no evidence to support its fantasy claims,” SoftBank said in a statement to the Financial Times said.
“We categorically reject any misrepresentation that any SoftBank entity ever intended to, or in fact, harm the interests of Credit Suisse or its funds, and would really sue Credit Suisse against any SoftBank entity in this matter. we will defend it vigorously. ”
The fierce battle indicates a weakening of relations between the two companies since Greensill collapsed last March. SoftBank was a key customer of Credit Suisse during the Japanese group’s rise as one of the world’s most influential technology investors, while Son was also a long-time personal customer of the bank.
Greensill’s collapse last year damaged Credit Suisse’s reputation for risk management and angered its wealthy clients. Some are now threatening legal action against the bank after being persuaded to invest in the Greensill-linked funds with the promise that they would deliver better returns than cash deposits, but with low risk.
Credit Suisse declined to comment outside of the submissions.