Credit Suisse faces anger at final shareholder meeting
By Noele Illien and John O'Donnell
Reuters
April 04, 2023
Reuters
April 04, 2023
ZURICH (Reuters) - Credit Suisse will face shareholder anger on Tuesday at what will be its final annual general meeting after the bank was rescued last month by Swiss rival UBS.
The hastily-arranged takeover by Zurich-based UBS, for which Switzerland invoked emergency legislation, bypassed Credit Suisse shareholders, who would otherwise have had a say, and largely wiped out the value of their holdings.
Tuesday's shareholder meeting marks an ignominious end for the 167-year-old flagship bank founded by Alfred Escher, a Swiss magnate affectionately dubbed King Alfred I, who helped build the country's railways and then Credit Suisse.
After years of scandal and losses, Credit Suisse came to the brink of collapse before UBS rode to the rescue with a shotgun merger engineered and bankrolled by the Swiss authorities.
The meeting is the first time that Chairman Axel Lehmann and Chief Executive Ulrich Koerner will publicly address shareholders since the takeover was announced.
Credit Suisse had been attempting to put the past behind it and restructure, before a shock triggered by the collapse of Silicon Valley Bank in the U.S. sent it into a spiral.
After a run on 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 earlier market value.
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.
U.S. proxy advisor Institutional Shareholder Services (ISS) had earlier rebuked the bank's management for "lack of oversight and poor stewardship".
In the lead up to Tuesday, Credit Suisse said it had withdrawn certain proposals from the meeting's agenda.
Those include the discharge of management, which is typically a bellwether of confidence. It also ditched plans for a special bonus linked to the bank's transformation plan.
Credit Suisse's near collapse not only wiped billions of Swiss francs off the value of its shares. It also completely wiped out $17 billion of Additional Tier 1 (AT1) debt.
A group of AT1 investors has hired law firm Quinn Emanuel Urquhart & Sullivan to demand compensation.
Meanwhile, the office of the attorney general on Sunday said Switzerland's Federal Prosecutor has opened an investigation into the Credit Suisse takeover.
The prosecutor is looking into potential breaches of Swiss criminal law by government officials, regulators and executives at the two banks.
Credit Suisse investors slam failures as chairman apologizes
By JAMEY KEATEN
By JAMEY KEATEN
TODAY
1 of 12
Swiss bank Credit Suisse Chairman Axel P. Lehmann speaks during the annual shareholders' meeting of the Swiss banking group, in Zurich, Switzerland, on Tuesday, April 4, 2023. Once-venerable Credit Suisse is heading into a possible firestorm Tuesday as shareholders meet for what is shaping up to be their last crack at managers following a colossal collapse of the bank’s stock price over the last decade and as rival UBS is set to gobble up the 167-year-old Swiss lender at a bargain-basement price. (Michael Buholzer/Keystone via AP)
ZURICH (AP) — Credit Suisse shareholders on Tuesday upbraided the Swiss bank’s leaders for years of mismanagement, scandal and obfuscation that sent its stock price into the gutter, while executives apologized and insisted that the only way forward for the once-venerable lender was a government-engineered takeover by rival UBS.
A largely polite — if at times boisterous, emotional, angry and even humorous — mood pervaded at the first in-person shareholder meeting in four years and likely the last in the bank’s 167-year history: Credit Suisse is set to be swallowed by its crosstown competitor in the coming months in a deal that was forced through without a shareholder vote.
Despite speech after speech airing concerns ranging from Switzerland’s role in global finance to environmental impact to wiped-out pension savings, shareholders narrowly approved a compensation plan for last year that will pay out millions to executives and board members. Investors also reelected board members who will shepherd the bank into UBS’s arms.
Axel Lehmann, who became Credit Suisse chairman only last year after joining the bank from UBS in 2021, decried “massive outflows” of customer funds in October and a “downward spiral” that culminated last month as a U.S. banking crisis unleashed global financial turmoil.
“The bank could not be saved,” he said, and only two options awaited — a deal or bankruptcy.
“The bitterness, anger and shock of those who are disappointed, overwhelmed and affected by the developments of the past few weeks is palpable,” Lehmann said. “I apologize that we were no longer able to stem the loss of trust that had accumulated over the years and for disappointing you.”
The bank’s pending demise has been years in the making, with critics blaming a blend of greedy managers, either unsuspecting or toothless regulators, government officials asleep at the wheel, and international pressure for profits and financial market stability at the expense of Switzerland’s generally staid and conservative culture. At times at Tuesday’s shareholder meeting, U.S. finance and allegations of American bullying were a target.
A couple dozen protesters, including some hoisting a severed boat labeled “Crisis Suisse,” gathered outside the Zurich hockey arena hosting the annual meeting, while shareholders and employees voiced their grievances as they got their last crack at managers.
Stepping to a podium, one blasted “bonus mania,” and another used a metaphor from Christianity to repeatedly ask, “When is enough, enough?”
Yet another held up walnuts as props, saying, “A bag of these is worth about one share.” One young investor took off his shirt to reveal a T-shirt with the words “Stop the Swindle” written in red.
Shareholder Guido Röthlisberger said he wore a red tie “to represent the fact that I and plenty of others today are seeing red.”
“I rather feel that I’ve been cheated by these institutions,” he said.
Swiss government officials hastily orchestrated the $3.25 billion takeover of Credit Suisse by UBS two weekends ago after Credit Suisse’s stock plunged and jittery depositors quickly pulled out their money. Political leaders, financial regulators and the central bank feared a teetering Credit Suisse could further roil global financial markets following the collapse of two U.S. banks.
Shareholders did not get to vote on the deal after the government passed an emergency ordinance to bypass the step. Some came to the annual meeting to hear managers explain what went wrong.
“The whole thing — how this happened — makes me a little bit angry,” shareholder Markus Huber said.
Huber, a 56-year-old self-employed handyman, suspected government officials and bank leaders cooked up the deal “in secrecy” and said there should have been greater transparency.
Shareholders felt “a little bit astonished that there hadn’t been warnings out before,” he said.
The takeover, however, wasn’t on the docket for the meeting, the first held in person since 2019 because of the COVID-19 pandemic. For the thousands in the arena, many of them seemingly Swiss retirees, the speeches amounted to a collective outcry about a once-fabled bank gone bust — and with it a bit of Swiss pride.
In 2007, Credit Suisse shares fetched as much nearly 88 Swiss francs (dollars). Today, they’re trading at about 80 cents.
The bank swooned from scandal to scandal in recent years: Bad bets on hedge funds; accusations it didn’t report secret offshore accounts wealthy Americans held to avoid paying U.S. taxes; failing to prevent money laundering by a Bulgarian cocaine ring.
The Swiss attorney general’s office says it’s opened a probe into events surrounding Credit Suisse ahead of the UBS takeover. Executives hope that the deal will close in coming months but acknowledged a complex transaction.
For Credit Suisse investors, the deal has meant losses. Shareholders collectively will get 3 billion francs ($3.3 billion) in the combined company, while investors holding about 16 billion francs ($17.3 billion) in higher-risk bonds were wiped out.
Typically, shareholders face losses before those holding bonds if a bank goes under.
Swiss regulators, who will hold a news conference Wednesday, say contracts show the bonds can be written down in a “viability event.”
Global law firm Quinn Emanuel said bondholders have hired the firm to “represent them in discussions with Swiss authorities and possible litigation to recover losses.”
Credit Suisse executives apologize to shareholders in final meeting
By Paul Godfrey
Protestors were out in force in Zurich for Tuesday's final meeting of the shareholders of the 167-year-old Swiss bank.
The alternative, he said, would have resulted in a total loss for shareholders with unpredictable risks for clients and severe consequences for the economy and global financial markets.
An emotional CEO Ulrich Korner said Credit Suisse ran out of time to implement a turnaround plan embarked upon in October.
"This fills me with sorrow. What has happened over the past few weeks will continue to affect me personally and many others for a long time to come," he said.
UBS could pare Credit Suisse's global workforce by up to 30% with 9,000 job cuts in Switzerland and a further 25,000 around the world.
Anticipating a backlash, police were mobilized outside and inside the 5,000-capacity ice hockey stadium in the Zurich suburb of Oerlikonvenue as protesters and shareholders filed in seeking answers to the debacle.
They will not, however, get a vote on the deal that saw UBS acquire Credit Suisse -- which as of the end of 2022 had assets of around $1.4 trillion -- for just $3.2 billion with investors receiving one UBS share for every 22.48 Credit Suisse shares they held.
RELATED Deutsche Bank's shares drop in latest trouble for financial institutions
The deal, which the government, the central bank and regulators insist was necessary to prevent a meltdown of the global banking sector in the wake of the collapse of the United States' Silicon Valley Bank and Signature Bank, has been mired in controversy.
In the two weeks since, the regulator has been forced to defend a decision ordering Credit Suisse to write down $17 billion worth of junior bonds to zero, UBS' CEO has been replaced and the country's top prosecutor launched a criminal probe into the takeover.
1 of 12
Swiss bank Credit Suisse Chairman Axel P. Lehmann speaks during the annual shareholders' meeting of the Swiss banking group, in Zurich, Switzerland, on Tuesday, April 4, 2023. Once-venerable Credit Suisse is heading into a possible firestorm Tuesday as shareholders meet for what is shaping up to be their last crack at managers following a colossal collapse of the bank’s stock price over the last decade and as rival UBS is set to gobble up the 167-year-old Swiss lender at a bargain-basement price. (Michael Buholzer/Keystone via AP)
ZURICH (AP) — Credit Suisse shareholders on Tuesday upbraided the Swiss bank’s leaders for years of mismanagement, scandal and obfuscation that sent its stock price into the gutter, while executives apologized and insisted that the only way forward for the once-venerable lender was a government-engineered takeover by rival UBS.
A largely polite — if at times boisterous, emotional, angry and even humorous — mood pervaded at the first in-person shareholder meeting in four years and likely the last in the bank’s 167-year history: Credit Suisse is set to be swallowed by its crosstown competitor in the coming months in a deal that was forced through without a shareholder vote.
Despite speech after speech airing concerns ranging from Switzerland’s role in global finance to environmental impact to wiped-out pension savings, shareholders narrowly approved a compensation plan for last year that will pay out millions to executives and board members. Investors also reelected board members who will shepherd the bank into UBS’s arms.
Axel Lehmann, who became Credit Suisse chairman only last year after joining the bank from UBS in 2021, decried “massive outflows” of customer funds in October and a “downward spiral” that culminated last month as a U.S. banking crisis unleashed global financial turmoil.
“The bank could not be saved,” he said, and only two options awaited — a deal or bankruptcy.
“The bitterness, anger and shock of those who are disappointed, overwhelmed and affected by the developments of the past few weeks is palpable,” Lehmann said. “I apologize that we were no longer able to stem the loss of trust that had accumulated over the years and for disappointing you.”
The bank’s pending demise has been years in the making, with critics blaming a blend of greedy managers, either unsuspecting or toothless regulators, government officials asleep at the wheel, and international pressure for profits and financial market stability at the expense of Switzerland’s generally staid and conservative culture. At times at Tuesday’s shareholder meeting, U.S. finance and allegations of American bullying were a target.
A couple dozen protesters, including some hoisting a severed boat labeled “Crisis Suisse,” gathered outside the Zurich hockey arena hosting the annual meeting, while shareholders and employees voiced their grievances as they got their last crack at managers.
Stepping to a podium, one blasted “bonus mania,” and another used a metaphor from Christianity to repeatedly ask, “When is enough, enough?”
Yet another held up walnuts as props, saying, “A bag of these is worth about one share.” One young investor took off his shirt to reveal a T-shirt with the words “Stop the Swindle” written in red.
Shareholder Guido Röthlisberger said he wore a red tie “to represent the fact that I and plenty of others today are seeing red.”
“I rather feel that I’ve been cheated by these institutions,” he said.
Swiss government officials hastily orchestrated the $3.25 billion takeover of Credit Suisse by UBS two weekends ago after Credit Suisse’s stock plunged and jittery depositors quickly pulled out their money. Political leaders, financial regulators and the central bank feared a teetering Credit Suisse could further roil global financial markets following the collapse of two U.S. banks.
Shareholders did not get to vote on the deal after the government passed an emergency ordinance to bypass the step. Some came to the annual meeting to hear managers explain what went wrong.
“The whole thing — how this happened — makes me a little bit angry,” shareholder Markus Huber said.
Huber, a 56-year-old self-employed handyman, suspected government officials and bank leaders cooked up the deal “in secrecy” and said there should have been greater transparency.
Shareholders felt “a little bit astonished that there hadn’t been warnings out before,” he said.
The takeover, however, wasn’t on the docket for the meeting, the first held in person since 2019 because of the COVID-19 pandemic. For the thousands in the arena, many of them seemingly Swiss retirees, the speeches amounted to a collective outcry about a once-fabled bank gone bust — and with it a bit of Swiss pride.
In 2007, Credit Suisse shares fetched as much nearly 88 Swiss francs (dollars). Today, they’re trading at about 80 cents.
The bank swooned from scandal to scandal in recent years: Bad bets on hedge funds; accusations it didn’t report secret offshore accounts wealthy Americans held to avoid paying U.S. taxes; failing to prevent money laundering by a Bulgarian cocaine ring.
The Swiss attorney general’s office says it’s opened a probe into events surrounding Credit Suisse ahead of the UBS takeover. Executives hope that the deal will close in coming months but acknowledged a complex transaction.
For Credit Suisse investors, the deal has meant losses. Shareholders collectively will get 3 billion francs ($3.3 billion) in the combined company, while investors holding about 16 billion francs ($17.3 billion) in higher-risk bonds were wiped out.
Typically, shareholders face losses before those holding bonds if a bank goes under.
Swiss regulators, who will hold a news conference Wednesday, say contracts show the bonds can be written down in a “viability event.”
Global law firm Quinn Emanuel said bondholders have hired the firm to “represent them in discussions with Swiss authorities and possible litigation to recover losses.”
Credit Suisse executives apologize to shareholders in final meeting
By Paul Godfrey
Protestors were out in force in Zurich for Tuesday's final meeting of the shareholders of the 167-year-old Swiss bank.
Photo by Michael Buholzer/EPA-EFE
April 4 (UPI) -- Credit Suisse Chairman Axel Lehmann apologized to investors Tuesday at the bank's final shareholders' meeting as an independent company for the massive hit they took from the emergency takeover by rival UBS.
In the bank's first public comments since the March 19 government-brokered rescue, Lehmann acknowledged it was "a sad day" for investors and said he understood the "bitterness, the anger and the shock of all those who are disappointed, overwhelmed and affected by the developments."
"I apologize that we were no longer able to stem the loss of trust that had accumulated over the years, and for disappointing you," Lehmann said.
"Until the end, we fought hard to find a solution, but ultimately there were only two options: deal or bankruptcy. The merger had to go through."
April 4 (UPI) -- Credit Suisse Chairman Axel Lehmann apologized to investors Tuesday at the bank's final shareholders' meeting as an independent company for the massive hit they took from the emergency takeover by rival UBS.
In the bank's first public comments since the March 19 government-brokered rescue, Lehmann acknowledged it was "a sad day" for investors and said he understood the "bitterness, the anger and the shock of all those who are disappointed, overwhelmed and affected by the developments."
"I apologize that we were no longer able to stem the loss of trust that had accumulated over the years, and for disappointing you," Lehmann said.
"Until the end, we fought hard to find a solution, but ultimately there were only two options: deal or bankruptcy. The merger had to go through."
The alternative, he said, would have resulted in a total loss for shareholders with unpredictable risks for clients and severe consequences for the economy and global financial markets.
An emotional CEO Ulrich Korner said Credit Suisse ran out of time to implement a turnaround plan embarked upon in October.
"This fills me with sorrow. What has happened over the past few weeks will continue to affect me personally and many others for a long time to come," he said.
UBS could pare Credit Suisse's global workforce by up to 30% with 9,000 job cuts in Switzerland and a further 25,000 around the world.
Anticipating a backlash, police were mobilized outside and inside the 5,000-capacity ice hockey stadium in the Zurich suburb of Oerlikonvenue as protesters and shareholders filed in seeking answers to the debacle.
They will not, however, get a vote on the deal that saw UBS acquire Credit Suisse -- which as of the end of 2022 had assets of around $1.4 trillion -- for just $3.2 billion with investors receiving one UBS share for every 22.48 Credit Suisse shares they held.
RELATED Deutsche Bank's shares drop in latest trouble for financial institutions
The deal, which the government, the central bank and regulators insist was necessary to prevent a meltdown of the global banking sector in the wake of the collapse of the United States' Silicon Valley Bank and Signature Bank, has been mired in controversy.
In the two weeks since, the regulator has been forced to defend a decision ordering Credit Suisse to write down $17 billion worth of junior bonds to zero, UBS' CEO has been replaced and the country's top prosecutor launched a criminal probe into the takeover.
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