Digital Zeitgeist – Furious Investors At Credit Suisse Believe The Bank’s Board Should Be Placed Behind Bars
Angry Credit Suisse shareholders protested CEO compensation plans and demanded that board members be “put behind bars” during the bank’s final annual meeting, during which the head of the Swiss institution expressed his “true regret” for the bank’s failure.
The last annual general meeting of the 167-year-old bank was held in Zurich, and shareholders used the majority of the nearly five hours to express outrage over poor management and attack excessive pay for “incompetent and greedy” bankers whom they claimed took too many risks and endangered Switzerland’s economic prosperity.
Board members came under fire for agreeing too quickly to UBS’s purchase of the company last month and for making a lousy deal for investors, despite management’s insistence that bankruptcy was the only other option. One investor declared, “This is a shameful day for Switzerland.” We have, in my opinion, essentially lost faith in the Swiss banking industry.
Another bemoaned the decline of its shares, which he said were now only worth a “sack of walnuts,” and sent the chair, Axel Lehmann, some shells as a gift. Another cautioned that some “may even contemplate of killing themselves since they no longer have any money” and that retirees whose lives depended on Credit Suisse stock had seen their investments “burn up in smoke.”
He asserted that the board should be held accountable for the numerous problems that have dogged the bank, including tax fraud and evasion. The shareholder said that these individuals “should be taken to court, should be put behind bars, and should no longer be allowed to practice their profession,” the shareholder said.”
Investors barely supported the re-election of a slimmed-down board and whatever compensation the members are entitled to for aiding UBS’ acquisition of its Swiss competitor. It includes Lehmann, whose re-election was approved by approximately 55.7% of stockholders.
Executives, however, were not as fortunate. A plan to jointly pay CEOs up to 34 million Swiss francs (£30 million) over the course of the next year, including for any activity related to the merger, was defeated by a rebellion of 48.4% of shareholders. The idea was only accepted by 48.2%.
Whether it would require the remaining executives to work for free was not immediately obvious. In a statement, Credit Suisse stated that “the board will review this finding and will decide potential future steps.”
The bank’s bosses had legitimate plans to turn the bank around, but they had been “thwarted” by market panic over the overall health of the global banking sector following the collapse of the U.S. tech lender Silicon Valley Bank days earlier, according to Lehmann, who apologised for the anger among investors. Lehmann also admitted that the bosses had made mistakes in the past.
The bank had “fought hard to find a solution,” he said, but finally had no choice but to either reach a settlement with UBS or file for bankruptcy.
“We wanted to put all our energy and our efforts into turning the situation around,” Lehmann said. “It pains me that we didn’t have the time to do so in that fateful week in March our plans were thwarted. And for that, I am truly sorry.”
He added: “I apologise that we were no longer able to stem the loss of trust that had accumulated over the years and for disappointing you.”
The Swiss government engineered a sale of Credit Suisse to UBS on March 19 as concern about the stability of the financial sector increased in the wake of SVB’s failure.
After a protracted string of scandals, regulatory issues, and failed financial bets, the Swiss lender has been battling to retain clients and make money for a long time. The Saudi National Bank, the company’s main stakeholder, decided against providing more finance because of rules that effectively restricted its participation, which nearly destroyed faith in the company by mid-March.
The Swiss government intervened, initially providing a 50 billion Swiss franc (£45 billion) line of credit, and subsequently paving the way for UBS, a larger local rival of Credit Suisse, to acquire it four days later.
Credit Suisse’s chief executive, Ulrich Körner, told shareholders he understood their disappointment. “After 167 years, Credit Suisse is giving up its independence.”
However, Lehmann said the only other option would have been bankruptcy. “This would have led to the worst scenario: namely a total loss for shareholders, unpredictable risks for clients, severe consequences for the economy and the global financial markets,” he said.
online sources: theguardian.com, credit-suisse.com