Credit Suisse Selling Risky Assets to Own Employees

In its quest to raise cash and get risky assets off its balance sheet, Credit Suisse Group found some willing buyers very close to home: its own employees.

Senior bankers who got illiquid loans and bonds as part of their pay participated in the Expanded Partner Asset Facility, which closed Dec. 31, and put a total of $450 million of their own funds into it.

Bloomberg reported that the new fund would use the leverage of borrowed money to buy more than $450 million of assets. The report cited someone familiar with the arrangement saying that Credit Suisse may act as the lender to the employee fund, and the reduction in so-called risk-weighted assets will reduce Credit Suisse’s capital requirements.

Brad Hintz, an analyst at Sanford C. Bernstein & Co. in New York, was quoted saying, “This is an advantage to the company, if priced correctly, in that it will reduce their capital charges and liquefy their balance sheet. The question is what goes into it, how is it being valued and are they using a third-party firm to value it? Because to do anything else is a transfer of value from the shareholders to the employees.”