SoftBank Withdraws $700M From Credit Suisse Fund Over Conflict Of Interest With Vision Fund

SoftBank Group Corp. SFTBY withdrew $700 million from four of its funds at Credit Suisse Group AG CS after the bank expressed uneasiness with proceeds from the fund being funneled into companies backed by the Japanese group, the Wall Street Journal reported Monday.

What Happened

The funds sourced assets from the United Kingdom-based Greensill Capital, a financing company in which SoftBank holds a majority stake.

Credit Suisse's management reportedly began an internal review of the funds after growing wary of possible conflicts of interest in the Greensill funds, which profit by facilitating short-term cash to companies.

It was reported last month that SoftBank invested more than $500 million into the Zürich-headquartered bank’s funds, which in turn invested in the debt of the Tokyo-based firm's struggling Vision Fund portfolio companies.

Credit Suisse’s management was concerned that 15% of the assets in one of the funds were invested in four of the SoftBank-backed companies, people familiar with the matter told the Journal.

Why It Matters

There are also worries at Credit Suisse about a side agreement struck by the bank's employees with SoftBank, which reserves three out of the funds exclusively for Greensill-generated assets. 

All the four funds together manage nearly $7 billion with investors including pension funds, corporate treasurers, and wealthy families.

The SoftBank withdrawal last week caused the largest of the Greensill funds to drop 12% at less than $5 billion, the Journal noted.

Greensill welcomed the developments and termed them “in the interests of all investors.”

Price Action 

Credit Suisse shares traded nearly 2% higher at $10.90 in the pre-market session Tuesday. SoftBank OTC shares closed 0.6% lower at $29.80 on Monday. Photo credit: Credit Suisse.