It is difficult to think that it was a stroke of luck, what put Credit Suisse away from the collapse of the Chinese giant Evergrande. The Swiss bank, once the real estate company’s main international underwriter, closed all of its positions late last year. The reports on Financial Times noting how the move kept the Swiss safe from potential losses in the event of a default by the Evergrandas. Also because in the last decade, Credit Suisse has bought $ 4.6 billion of bonds, but hasn’t bought any more for at least two years after expressing its concerns about the company’s financial situation.
According to sources inside the bank, cited by the FT, Credit Suisse has had doubts about Evergrande for at least three years: at least since the request for a loan by the president of the Chinese company, Hui Ka Yuan, was reported to the top of the bank. of 2018.
Evergrande had placed a $ 1.8 billion bond at the time to pay an extraordinary dividend to investors, and Hui – then China’s third richest man – subscribed a billion shares out of his own pocket due to unexpectedly low demand. Hui turned to Credit Suisse for the loan, offering the bonds as collateral for the transaction with the result of igniting a deal on the internal management problems of the Asian group. Also because three years ago the debt exceeded 100 billion dollars – a figure that then rose to 305 billion.
Credit Suisse therefore first decided to withhold financing from the president, then to gradually reduce its exposure to Evergrande.