Poor risk management by Credit Suisse’s asset management company kept the Swiss bank mostly unaware of the risky nature of lending procedures used by financier Lex Greensill that would lead to the collapse of his supply chain startup, according to Switzerland’s Financial Market Supervisory Authority (FINMA).

Credit Suisse’s asset management company had little knowledge or control over securitized claims made by Greensill on behalf of four Credit Suisse funds from 2017-21. In addition, the bank did not have any insight or control over insurance coverage made in its name for those claims, FINMA said.

As a result, Credit Suisse breached its supervisory obligations regarding its risk management practices and was ordered by FINMA to implement remedial measures to address the shortcomings.

FINMA announced Tuesday it concluded its investigation into Credit Suisse’s handling of the four funds connected to Greensill, each of which the bank closed following Greensill Capital’s insolvency in March 2021.

Approximately $10 billion in investor funds were tied up in the four funds, with Credit Suisse at the time taking steps to reduce risk following Greensill Capital’s collapse, FINMA said. The bank previously acknowledged its risk and compliance function failed to escalate numerous red flags.

“In its proceedings, FINMA concluded that Credit Suisse Group seriously breached its supervisory duty to adequately identify, limit, and monitor risks in the context of the business relationship with Lex Greensill over a period of years,” the regulator said in a press release. “FINMA also found serious deficiencies in the bank’s organizational structures during the period under investigation. Furthermore, it did not sufficiently fulfill its supervisory duties as an asset manager. FINMA thus concludes that there has been a serious breach of Swiss supervisory law.”

FINMA said it opened enforcement proceedings against four former Credit Suisse managers in connection with the bank’s handling of its relationship with Greensill.

In response to the collapse, Credit Suisse revised its governance structures and strengthened its control processes used to approve and monitor fund products. The bank will “periodically and holistically” review its most important business relationships (approximately 500) at the executive board level, and areas of responsibility of its approximately 600 highest managers must be recorded in a document of responsibility, FINMA said.

In a statement Tuesday, Credit Suisse welcomed the closure of FINMA’s investigation and said it “implemented a series of extensive organizational measures” recommended by its own internal investigation and FINMA.

Credit Suisse said it dismissed several senior managers and employees involved with the Greensill funds; implemented disciplinary measures for others, including clawing back previously granted compensation awards; and made improvements to governance, oversight, and accountability to increase transparency and reduce risk. The bank also moved risk oversight into a dedicated divisional risk management function.