Before the accounting scandal and the stock crash and the defaulted loans, Luckin Coffee Ltd.’s billionaire founder Lu Zhengyao was an ideal customer for Credit Suisse Group AG.
“I’ve had I don’t know how many dinners with him in Beijing and he’s absolutely the poster child for what we want to do,” Tidjane Thiam said at a conference last year when he was still head of the bank. He lauded Lu’s relationship with the firm that ranged from private banking to stock sales. “He’s a dream client.”
Luckin’s dramatic fall from grace this month blindsided some of the top names in global finance but few have seen a bigger fallout than Credit Suisse. The lender lost a high-profile Hong Kong IPO in the wake of the scandal and reported a five-fold increase in loan-loss provisions at its Asia Pacific unit, primarily due to a default by Lu. The bank is conducting an internal review of the case, and scrutiny on loans to Chinese companies has increased, according to people familiar with the matter who declined to be identified discussing private matters.