Behind Greensill’s collapse: detour through risky loans



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Lex Greensill has presented himself as a savior for small business.

He started Greensill Capital to provide the little guy with a banking service that was mostly only for blue-chip companies: supply chain finance, a type of cash advance that helps when payments are due from customers.

Mr Greensill, the son of an Australian melon grower, wanted to provide this useful service to millions of less well-established small businesses. He planned to build a technology platform that would outrun larger competitors such as JPMorgan Chase & Co. and Citigroup Inc.

His world fell apart this week when Greensill filed for bankruptcy, trapping a global network of borrowers – more than half of them in the United States – as well as the company’s backers, SoftBank Group Corp., Credit Suisse. Group AG and Japanese insurer Tokio Marine Holdings Inc.

Small towns that held deposits at the German Greensill Bank face losses on holdings they thought were safe. Investors in Credit Suisse supply chain funds who invested in Greensill loans no longer have access to $ 10 billion in cash.

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