Credit Suisse’s private bank halts margin loans on Adani bonds

February 01, 2023

Credit Suisse Group AG has stopped accepting bonds of Gautam Adani’s group of companies as collateral for margin loans to its private banking clients, a sign that scrutiny of the Indian tycoon’s finances is growing after allegations of fraud by short seller Hindenburg Research.

The Swiss lender’s private banking arm has assigned a zero lending value for notes sold by Adani Ports and Special Economic Zone, Adani Green Energy and Adani Electricity Mumbai Ltd., according to people familiar with the matter, who asked not to be identified discussing private information. It had previously offered a lending value of about 75% for the Adani Ports notes, one of the people said.

Other banks continue to lend against Adani debt. At least two European private banks kept the level unchanged as of now, with one of those offering lending of between 75% to 80% for Adani Ports dollar bonds, according to the people. A potential trigger for lowering could be any rating downgrade, one of the people said.

When a private bank cuts lending value to zero, clients typically have to top up with cash or another form of collateral and if they fail to do so, their securities can be liquidated.

A Credit Suisse spokeswoman didn’t immediately comment. A representative at Adani Group said it has no relationship with Credit Suisse’s private bank.