The Credit Suisse and GAM funds could face losses if Greensill's clients aren't able to pay back their supply-chain finance loans. More than 50% of the borrowers in the Credit Suisse funds were based in the U.S., including blue-chip companies and government agencies.
As part of its insolvency process, Greensill is in talks to sell its core operations to Apollo Global Management APO -4.24% and its insurance affiliate Athene Holding Ltd. ATH 5.97%for around $100 million, The Wall Street Journal previously reported, citing people familiar with the matter.
Greensill's loans were mostly short-term, and some customers without access to cash will need to find alternate sources of financing in the coming weeks and months. Apollo will use Athene Holding to fill in the funding gap for some, but not all, of Greensill's clients. It has been reaching out to Greensill clients in recent days, the Journal has reported.
Greensill's operations have grown rapidly in recent years. The number of staff ballooned to more than 1,000 employees in 2020 from 600 the year earlier. It has also been on an acquisition spree, picking up a string of fintech businesses in the past 18 months, including Finacity Corp., Earnd and Omni Latam.
SoftBank's Vision Fund was set to write down its $1.5 billion Greensill investment, the Journal previously reported, citing a person familiar with the matter. The startup's other big outside backer, private-equity firm General Atlantic, held a roughly 7% stake in Greensill.
Further pain was being felt in Germany, where Greensill owned a small bank. The country's financial regulator, BaFin, recently appointed a special representative to oversee day-to-day operations of Bremen-based Greensill Bank.
A preliminary tally shows that as much as 700 million euros of Greensill Bank's deposits, equivalent to $830 million, out of a total of €3.6 billion, or $4.3 billion, weren't covered by deposit insurance, according to a person familiar with the bank. Some of those deposits were held by German municipalities, which were attracted to Greensill for its slightly higher interest rates. German banks have increasingly been passing on negative rates to their customers. Municipalities in Germany aren't eligible for deposit protection.
"We are shocked," said Jonathan Berggötz, mayor of Bad Dürrheim, a tiny spa town in the Black Forest that had €2 million euro deposited in Greensill Bank. "We will use every opportunity to get our money back," Mr. Berggötz added.
Three other towns in Germany said they face losses of €6 million to €38 million each.
Greensill acquired the small German lender in 2014 for around $20 million. In 2019, Greensill used the bulk of an $800 million investment from SoftBank's Vision Fund to recapitalize the German lender, boosting its regulatory buffers.
It used the bank both to lend directly to clients in traditional loans and to fund its supply-chain finance deals until it packaged and sold some of them off to the Credit Suisse and GAM funds.
"The bank is as much as anything a warehouse that provides us with the ability to manage the liquidity requirements of our business," Mr. Greensill said in a 2019 interview.
Executives at Grant Thornton U.K. will oversee Greensill's insolvency procedure.
Also caught up in Greensill's problems was U.K. steel magnate Sanjeev Gupta. Greensill had $5 billion in loans outstanding to his GFG Alliance of companies, according to a person familiar with the relationship. With operations in a dozen countries, Mr. Gupta relied heavily on Greensill for financing.
A spokesman for GFG Alliance said that the company continues to operate as normal and that it is in discussions with financial institutions on further funding.
—Ben Dummett contributed to this article.
Write to Julie Steinberg at julie.steinberg@wsj.com, Duncan Mavin at duncan.mavin@wsj.com and Patricia Kowsmann at patricia.kowsmann@wsj.com
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