People
&Markets
Credit Suisse settles princeling probe
CREDIT SUISSEûAGREEDûTOûPAYûABOUTû53MûTOû
settle US bribery probes into its awarding of
jobs to family members and friends of
#HINESEûANDûOTHERûGOVERNMENTûOFlCIALSûINû
THEû!SIA
0ACIlCûREGIONûINûORDERûTOûWINû
lucrative investment banking business.
The US Department of Justice last week
said Credit Suisse’s Hong Kong unit will pay a
53MûCRIMINALûlNEûANDûENTERûAûNON
prosecution agreement, in which the Swiss
bank admitted and accepted responsibility
for wrongdoing.
#REDITû3UISSEûWILLûALSOûPAYû53MûTOû
settle related US Securities and Exchange
Commission civil claims.
*0û-ORGANûAGREEDûTOûPAYûABOUTû53Mû
in November 2016 to settle similar probes
into its hiring practices.
Credit Suisse was accused of violating the
Foreign Corrupt Practices Act by hiring and
promoting dozens of people connected with
!SIANûGOVERNMENTûOFlCIALSûFROMûûTOû
2013 as a quid pro quo to win banking
business.
The SEC said Credit Suisse offered jobs to
more than 100 people with such ties during
the period, including over 60 recommended
BYûOFlCIALSûFROMû#HINESEûSTATE
OWNEDû
companies.
Authorities said many of these
“relationship hires” or “referral hires” were
LESSûQUALIlEDûTHANûOTHERûJOBûCANDIDATESûWHOû
lacked the desired ties.
They said one referral hire was the
DAUGHTERûOFûAûTOPûOFlCIALûFORûAûSTATE
OWNEDû
Chinese energy company.Authorities said a senior Credit Suisse
investment banker in Hong Kong called the
daughter “a princess [who was] not used to
too many rounds of interview”, and that
employees crafted a resume for her that had
to be “a bit ‘creative’” in the details.
“Trading employment opportunities for
LESS
THAN
QUALIlEDûINDIVIDUALSûINûEXCHANGEû
for lucrative business deals is an example of
NEPOTISMûATûITSûlNEST vû7ILLIAMû3WEENEY û
assistant director-in-charge of the Federal
"UREAUûOFû)NVESTIGATIONSû.EWû9ORKûOFlCE û
said in a statement.
Credit Suisse said it has made numerous
upgrades to its internal compliance procedures
and controls and there were no allegations that
clients or counterparties were harmed.
Jonathan StempelCredit Agricole sells €450m of Italian UTP loans
The long-awaited clear-up of non-performing
loans held by Italian banks is expected to
accelerate in the second half of the year, after
two sizeable portfolios were sold last week.
CREDIT AGRICOLE sold a portfolio of unlikely-
to-pay loans owed by its Italian customers to
private equity investor Bain Capital Credit.
The loans have a book value of €450m.
On Friday a portfolio with a gross book
value of €1.4bn was sold by a group of 53
Italian cooperative banks to Futura, a special
purpose vehicle majority-owned by investor
Varde Partners and backed by loan servicing
company Guber Banca and BARCLAYS.
Harish Kumar, managing director at
Alvarez & Marsal, said the introduction of
the new accounting standard, IFRS9, was an
important factor in the increased level of
activity among Italian lenders, which
between them still have an estimated
€250bn of non-performing exposures.
“IFRS9 is the single biggest driver of sales
of unlikely-to-pay loans. Before banks did
not have to take provisions against these but
now they need to do so against the whole
life of the loan,” he said.
UTP loans are those that are being kept
current but the lender has said the borrower is
considered unlikely to repay the principal at
the end of the loan period. Up to €100bn of
Italian NPLs are estimated to be in this category.
Some €8bn of the €17.2bn of assets
originally carried by two Venetian banks,
Banca Popolare di Vicenza and Veneto
Banca, rescued last year by the state, were
marked as UTPs.
Bain has now made seven acquisitions of
Italian loans, and this is its second from Credit
Agricole. “We believe it will pave the way for
other large sales of UTP portfolios,” said AlonAvner, head of European business at Bain.
The investor said the deal was one of the
largest transactions yet in the area purely
focused on UTP loans.CLOSE TO MILAN?
Kumar said the introduction of the new
accounting rules meant banks would push to
sell these loans now. “Once provisions have been
taken on these positions, banks would prefer to
sell assets in order to release capital,” he said.
The investment by the Varde vehicle
comprised of 9,000 positions outstanding with
borrowers across the north of Italy. About 39% of
the overall portfolio consisted of secured loans.
Kumar said the geographical location of the
borrower was a good indicator of recoveries from
the positions. “The closer they are to Milan, the
easier it is usually to recover the loan,” he said.
Christopher SpinkGoldman loses court appeal vs Novo Banco
Britain’s Supreme Court dismissed an appeal by
GOLDMAN SACHS for compensation from Portugal’s
NOVO BANCOûOVERûAû53MûLOANûTOû.OVOû
Banco’s bankrupt predecessor, Banco Espirito
Santo, which was carved up by the state in 2014.
The decision, announced by the court last
week, sets a precedent that could help Portugal
fend off other lawsuits involving major
bondholders in BES, such as Pimco and
Blackrock, which have challenged similar
decisions by the Portuguese central bank in
2015 not to transfer liabilities to Novo Banco.
The loan arranged by Goldman was
extended to BES by Luxembourg-based vehicle
Oak Finance in 2014, shortly before the bank
went bankrupt under the weight of the debts of
its founding family, and Goldman has sought
compensation from Novo Banco, which took
over the healthy operations of BES.
Britain’s Supreme Court said it unanimously
rejected the appeal, even though the original
loan agreement was governed by English law.
Novo Banco declined to comment.
After the collapse of BES in August 2014,
Portugal’s central bank transferred some
assets and liabilities to Novo Banco, whichtook over BES operations after an injection of
ABOUTûõBNû53BN ûOFûPUBLICûFUNDSû)TûWASû
ACQUIREDûLASTûYEARûBYû53ûPRIVATEûEQUITYûlRMû
Lone Star.
In December 2014, the central bank
SPECIlEDûTHEû'OLDMANûLOANûWASûNOTûELIGIBLEû
for the transfer and had never been
transferred, to which Goldman objected.
The court said it understood “that an English
court must treat the Oak liability as never having
been transferred to Novo Banco. It was therefore
never party to the jurisdiction clause.”
Andrei Khalip