Credit Suisse is overhauling its asset management business and has suspended bonuses after Greensill collapsed

Credit Suisse
The logo of Swiss bank Credit Suisse is seen at a branch office in Bern, Switzerland October 28, 2020. Picture taken October 28, 2020.

  • Credit Suisse is shaking up its asset management business following the collapse of Greensill.
  • Ulrich Körner will become the new CEO of the bank’s asset management business from April 1.
  • Three senior asset management employees have temporarily stepped aside.
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Credit Suisse is overhauling its asset management business as it faces regulatory investigations into its dealings with Greensill Capital, warning on Thursday that its results and client confidence could be hit by the finance firm’s collapse.

Switzerland’s second-biggest bank and its asset management arm are reeling from the implosion of around $10 billion of funds related to British supply chain financier Greensill, heaping pressure on CEO Thomas Gottstein.

Credit Suisse said in its annual report that Swiss regulator FINMA was looking into the matter and reviewing its impact in relation to the bank’s so-called Pillar 2 buffer, which is capital banks hold against risks.

“We can confirm that we have also imposed a Pillar 2 buffer in this context as stated by the bank in its annual report,” FINMA said, adding it was in contact with other authorities.

Credit Suisse stuck to its guidance on capital and said plans to buy back at least 1 billion Swiss francs ($1.1 billion) worth of stock this year were still on.

The bank named Ulrich Koerner as its new head of asset management and said it would separate the business into its own division from April 1. It has been part of the international wealth division run by Philipp Wehle.

Koerner will return to Credit Suisse from arch-rival UBS, where he most recently served as adviser to the CEO from 2019 to 2020. He ran UBS Asset Management from 2014 to 2019. Koerner was previously a senior executive at Credit Suisse Financial Services and ran the Swiss business.

Current asset management head Eric Varvel, who is also chairman of Credit Suisse’s investment bank and head of its U.S. holding company, will focus on his other roles.

Credit Suisse’s annual report said some unidentified fund investors had threatened litigation over the Greensill affair and the ultimate cost may be “material” to operating results.

“The portfolio manager has been informed that certain of the notes underlying the funds will not be repaid when they fall due,” it added.

“We might also suffer reputational harm associated with these matters that might cause client departures or loss of assets under management,” it said.

Three senior asset management employees who helped oversee the Greensill funds have temporarily stepped aside.

The annual report showed the bonuses for a number of senior employees involved, “up to and including Executive Board members”, had been suspended.

Credit Suisse shares gained 2.5%.

The new structure bucks a trend for blending Credit Suisse products and services in a seamless offering to its wealthy clients. It could, however, help address suggestions that the model lent itself to internal conflicts of interest.

Asset Management lost 39 million Swiss francs ($42 million)before taxes last year after a hefty writedown on an investment in a U.S. hedge fund.

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Bill Gates advised against investing in Bitcoin, saying cryptocurrencies damage the environment

Bill Gates
Gates spoke out against bitcoin citing environmental damages caused by the cryptocurrency.

  • Billionaire Microsoft founder Bill Gates criticized bitcoin’s environmental impact in an interview.
  • Speaking to CNBC’s Andrew Ross Sorkin, he said it used more electricity than any other method.
  • Cambridge University analysis suggested bitcoin used more energy than Argentina, the BBC reported.
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Bill Gates is one of the richest people in the world and an outspoken advocate, fighting against climate change.

In a Clubhouse interview with New York Times reporter and CNBC co-anchor Andrew Ross in February, Gates spoke out against bitcoin citing environmental damages caused by the cryptocurrency.

“Bitcoin uses more electricity per transaction than any other method known to mankind,” Gates said. “It’s not a great climate thing.”However, he added that bitcoin’s energy use may be acceptable if green energy is used and it is not “crowding out other users.”

Gates clarified that he does not see climate change and bitcoin as being “closely related,” and labeled himself a “bitcoin skeptic,” citing a preference to invest in “products” like malaria and measles vaccines rather than cryptocurrencies.

Cryptocurrencies have become a major culprit for energy consumption, with the world’s bitcoin network using as much power as the whole of Ireland in 2018.

Analysis by the University of Cambridge released earlier this year suggested that bitcoin was now consuming more electricity than Argentina, according to the BBC.

Gates is not the only one to speak out against bitcoin’s environmental impact, with CIO of Société Générale’s Kleinwort Hambros bank, Fahad Kamal, saying bitcoin’s energy use was “staggering” and a major worry for investors.

Economist Nouriel Roubini also criticized bitcoin and the growing trend in bitcoin investment, spiked by endorsements from Tesla chief Elon Musk.

“Since the fundamental value of bitcoin is zero and would be negative if a proper carbon tax was applied to its massive polluting energy-hogging production, I predict that the current bubble will eventually end in another bust,” Roubini said.

However, others have stood behind bitcoin and the cryptocurrency soared to record highs on February 21, reaching $58,640. “Mad Money” host Jim Cramer previously told Sorkin on CNBC that it was “almost irresponsible” for companies not to own bitcoin.

Meanwhile, Ark Invest founder Cathie Woods said she expected the price of bitcoin to rise between $40,000 and $400,000 and that digital wallets would gut traditional banks.

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Revolut is operating as a bank in 10 Central European countries, and hopes to do so across the continent

Revolut
Revolut has been operating as a bank in Poland and Lithuania since last year.

  • Revolut has launched as a bank in 10 Central European countries using a Lithuanian banking license.
  • The startup has also applied for a UK banking license and hopes to achieve profitability this year.
  • Revolut broke even in December and was valued at $5.5 billion in 2020 after raising $500 million.
  • Visit the Business section of Insider for more stories.

Revolut has started operating as a bank in 10 Central European countries.

Using a license issued in Lithuania, Revolut Bank will operate in Bulgaria, Cyprus, Croatia, Estonia, Greece, Latvia, Malta, Romania, Slovakia, and Slovenia.

The British-born startup and financial app has been operating as a bank in Poland and Lithuania since last year while maintaining its services in other European countries using its e-money license.

Revolut started 15 years ago as a service for withdrawing money outside users’ home country without commissions, exchanging currencies at a more favorable exchange rate than with banks, and making payments between friends.

In February last year, Revolut was valued at $5.5 billion after raising $500 million from TCV, a Silicon Valley growth fund.

The neobank has been adding to its services with more insurance options, a cryptocurrencies news feature, and the ability to split bills with non-Revolut users.

The advantage of a banking license is that it allows Revolut to be used for deposits, while e-money licenses mean Revolut serves as more of a wallet for its users.

After Brexit, the company moved its license from the UK to Lithuania in order to continue operating in European markets. However, Revolut has also applied for a UK banking license to improve its profitability.

“Revolut is now the fastest growing fintech company in Europe because we put the customer at the heart of everything that we do. Our product design is second to none, we have no hidden fees, and we are constantly building new and innovative financial products,” Revolut Bank CEO Virgilijus Mirkės said in a statement.

“Launching the bank in ten new European markets will provide a greater level of security and confidence for our customers, and will enable us to launch a host of new products and services in the near future,” he added.

In December 2020, the company broke even following a 40% revenue decrease earlier in the pandemic, suggesting that profitability may soon be on the cards.

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