Credit Suisse chairman ‘truly sorry’ as anger grows
ZURICH, April 4 (Reuters) – The chairman of Credit Suisse ( CSGN.S ) apologized for driving the bank to the brink of bankruptcy on Tuesday after facing shareholder anger over the sudden death of a national icon.
The hasty takeover by Zurich-based UBS ( UBSG.S ), for which Switzerland invoked emergency legislation, bypassed Credit Suisse shareholders, who would otherwise have had their say, and wiped them all out.
Its final shareholder meeting on Tuesday marks an ignominious end for the 167-year-old bank founded by Alfred Escher, a Swiss tycoon fondly called King Alfred I, who helped build the country’s railways and then the bank.
Protesters gathered outside the concert venue where the meeting took place, with some holding up an overturned boat to depict the collapse of the bank.
Inside, chairman Axel Lehmann apologized to around 2,000 shareholders in attendance, saying he had time left to turn the bank around, despite his belief “until the start of the fateful week” that it could survive.
“I’m really sorry,” Lehmann said. “I apologize that we were no longer able to curb the loss of confidence.”
With his voice breaking, he said: “Credit Suisse with its long and rich history is now taking a historic turn, we are very sorry for this and, personally, this moment also saddens me.”
After years of scandal and losses, Credit Suisse came to the brink of collapse before UBS came to the rescue with a merger engineered and financed by the Swiss authorities.
“Until the end, we fought hard to find a solution. But in the end, there were only two options: settlement or bankruptcy. The merger had to go through,” Lehmann said. He added that five board members will not run for re-election.
One by one, shareholders took to the stage to express their anger at the arranged marriage between the two banks and the crude deal for investors.
Shareholders criticized the board of directors and former management, including Urs Rohner, who was chairman for ten years until 2021.
Shareholder advisory firm Ethos condemned the “greed and incompetence of its managers” as well as the pay reaching “unimaginable proportions”.
“Shareholders have lost significant amounts of money and thousands of jobs are on the line,” he said.
The meeting is the first time Chairman Lehmann and Chief Executive Ulrich Koerner have publicly addressed shareholders since taking over.
Credit Suisse had tried to put the past behind it and restructure, before a shock caused by the collapse of Silicon Valley Bank in the US sent it into a tailspin.
After a flood of deposits, the Swiss government turned to UBS, which agreed to buy Credit Suisse for 3 billion Swiss francs ($3.3 billion), a fraction of its former market value.
This action angered not only shareholders, but many in Switzerland. A poll by political research firm gfs.bern found that most Swiss did not support the deal.
“The government’s use of emergency powers to push through this deal goes beyond legal and democratic norms,” said Dominik Gross of the Swiss Alliance of Development Organizations.
“Swiss taxpayers are also on the hook for billions of francs in unwanted investments and yet the government, (regulator) FINMA and the central bank have given little explanation about the state’s 9 billion (francs) loss guarantee to UBS.”
One of the world’s biggest investors, Norway’s sovereign wealth fund, said it would vote against the re-election of Lehmann and six other directors, in a public show of protest.
On Tuesday, just over half of shareholders voted to re-elect Lehmann as chairman – far fewer than usual and a sign of concern. The remaining six board members were also narrowly re-elected.
Shareholders also approved pay for the board of directors until the merger is completed, but voted against approving compensation for the bank’s executives.
US counsel Institutional Shareholder Services (ISS) had previously reprimanded the bank’s management for a “lack of oversight and poor governance”.
At the start of Tuesday’s meeting, Credit Suisse said it had withdrawn several proposals from the agenda.
They included the dismissal of management, which is usually a pillar of trust. It also scrapped plans for a special bonus linked to the bank’s transformation plan.
Near-collapse Credit Suisse also wrote off $17 billion of Additional 1 (AT1) debt.
A group of AT1 investors has hired law firm Quinn Emanuel Urquhart & Sullivan to seek compensation.
Meanwhile, the attorney general’s office on Sunday said the Swiss Federal Prosecutor has opened an investigation into the Credit Suisse takeover.
($1 = 0.9129 Swiss francs)
Reporting by Noele Illien and Linda Pasquini; editing by Lincoln Feast, Jason Neely, and Barbara Lewis
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