What’s behind Credit Suisse’s $440 million lawsuit against SoftBank and why it failed

A UK court has dismissed a $440 million lawsuit against Japan’s SoftBank group filed by Credit Suisse over losses from the collapse of Greensill Capital.

Judge Robert Miles of London’s High Court found that SoftBank’s activities in transactions dealing with Katerra, a US construction firm backed by the Japanese conglomerate, were in good faith.

The dismissal marks a major setback for UBS, which took over Credit Suisse in 2023 following its financial troubles linked to Greensill’s demise.

The ruling marks an end to one of the most high-profile disputes stemming from the Swiss bank’s investment losses.​

Decoding Credit Suisse’s $440 million lawsuit

Credit Suisse’s $440 million lawsuit against Japan’s SoftBank Group traces back to the 2021 collapse of Greensill Capital, a supply-chain finance firm whose failure wiped out billions for investors and played a key role in Credit Suisse’s own downfall.

At the heart of the dispute were loans Greensill had made to Katerra, a US construction company backed by SoftBank.

Credit Suisse claimed that, under SoftBank’s direction, Greensill forgave Katerra’s $440 million debt in exchange for shares, which then ended up with a SoftBank affiliate, leaving Credit Suisse’s fund investors holding the bag.

SoftBank, on the other hand, insisted it acted in good faith.

It stated that the $440 million was part of a restructuring plan intended to repay Credit Suisse’s investors, but the money never reached them due to Greensill’s internal mismanagement.

The company argued that Credit Suisse was trying to shift the blame for its own risky decisions and oversight failures.

The lawsuit also sits within the wider fallout from Greensill’s collapse, which forced Credit Suisse to shut down $10 billion in investment funds and ultimately led to its 2023 government-backed rescue by UBS.

For UBS, which inherited the claim, the case is an effort to recoup losses from one of the most tangled and high-profile financial fiascos of recent years.

What the verdict means for Credit Suisse, UBS, and investor confidence

The UK court verdict came as another embarrassing episode for Credit Suisse and its parent UBS.

For Credit Suisse, this loss underscores ongoing legacy issues and highlights the bank’s longstanding risk management failures that contributed to its downfall and the emergency rescue by UBS in 2023.

Investors have closely watched these legal disputes, as they directly relate to efforts to recover billions lost from supply-chain finance funds that were marketed as low-risk but proved disastrous.

UBS, which took a major bet by inheriting Credit Suisse’s legal liabilities and investor claims in the merger, attempted to restore investor confidence through an offer to repay up to 90% of the remaining trapped funds to investors.

However, the legal setback makes the recovery of losses more difficult, potentially discouraging future investments in similar products and putting additional pressure on UBS’s legacy operations.

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