Credit Suisse chairman admits failure, anger to shareholders
ZURICH –
The chairman of Credit Suisse apologized Tuesday to shareholders for failures of the once-venerable financial institution and acknowledged the shock and anger felt because the troubled Swiss lender is ready to be swallowed up by rival UBS in a government-arranged takeover.
Axel Lehmann, who took the highest board job solely final yr after becoming a member of Credit Suisse from UBS in 2021, decried “massive outflows” of buyer funds in October and a “downward spiral” that culminated final month as turmoil from a U.S. banking disaster spilled abroad.
“The bank could not be saved,” he stated, and solely two choices awaited — a deal or chapter.
“The bitterness, anger and shock of those who are disappointed, overwhelmed and affected by the developments of the past few weeks is palpable,” Lehmann informed what is probably going the final Credit Suisse shareholder assembly in its 167-year historical past.
“I apologize that we were no longer able to stem the loss of trust that had accumulated over the years and for disappointing you,” he stated.
Protesters, together with some hoisting a ship labelled “Crisis Suisse,” gathered outdoors the Zurich hockey area internet hosting the assembly and a few shareholders voiced their anger as they bought their final crack at managers following a collapse of the financial institution’s inventory value during the last decade and an impending merger engineered to sidestep investor approval.
In 2007, Credit Suisse shares fetched as a lot almost 88 Swiss francs ({dollars}). Today, they’re buying and selling at about 80 cents.
As the inventory skid worsened and jittery depositors pulled their cash, Swiss authorities officers swiftly orchestrated a US$3.25 billion takeover by UBS two weekends in the past. Political leaders, monetary regulators and the central financial institution feared a teetering Credit Suisse may additional roil world monetary markets following the collapse of two U.S. banks.
Crosstown competitor UBS has been identified for a extra conservative tradition after surviving the 2008 monetary disaster, thanks partly to a authorities bailout. Executives hope that the deal will shut in coming months however acknowledged a posh transaction.
Some shareholders, who didn’t get to vote on the takeover after the federal government handed an emergency ordinance to bypass the step, got here to listen to managers clarify what went flawed.
“The whole thing — how this happened — makes me a little bit angry,” stated shareholder Markus Huber, 56, as he lined as much as attend his first Credit Suisse annual assembly.
Huber, who’s self-employed in handyman providers, suspected authorities officers and financial institution leaders cooked up the deal “in secrecy” and stated there ought to have been larger transparency.
Shareholders felt “a little bit astonished that there hadn’t been warnings out before,” he stated.
The takeover, nevertheless, is not on the docket for the annual normal assembly, the primary held in particular person in 4 years due to the COVID-19 pandemic. The pared-down agenda consists of dialogue on points like a dividend of about 5 cents per share, the reelection of the board underneath Lehmann and granting a type of approval to managers for many of their actions working the financial institution.
Credit Suisse swooned from scandal to scandal in recent times: Bad bets on hedge funds; accusations of violating a U.S. plea deal by failing to report secret offshore accounts held by rich Americans to keep away from paying taxes; failing to do sufficient to forestall cash laundering by a Bulgarian cocaine ring.
The Swiss federal prosecutor’s workplace on Monday introduced it has opened a probe into occasions surrounding Credit Suisse forward of the UBS takeover.
A pair dozen activists, together with one sporting a masks of the pinnacle of the Swiss central financial institution, took parting photographs at Credit Suisse: Some held indicators decrying the financial institution’s ties to Mozambique, the place the financial institution was discovered to have violated anti-money-laundering guidelines and paid almost $700 million in settlements to British and U.S. authorities.
Environmentalists, in the meantime, lashed out at Credit Suisse’s investments in oil and pure gasoline — a longstanding grievance. Six years in the past, a few dozen activists led a peaceable protest by donning tennis outfits and whacking balls in a financial institution department close to Lausanne, riffing off Roger Federer’s position as a financial institution pitchman.
For Credit Suisse traders, the takeover deal has meant losses. Shareholders collectively will get 3 billion francs within the mixed firm, whereas traders holding about 16 billion francs ($17.3 billion) in higher-risk Credit Suisse bonds had been worn out.
Typically, shareholders face losses earlier than these holding bonds if a financial institution goes underneath. Swiss regulators defended the transfer, saying contracts present the bonds could be written down in a “viability event,” notably if the federal government affords extraordinary help.
That occurred underneath the Swiss govt department’s emergency measures, in accordance with regulators, who will maintain a news convention Wednesday.
Global legislation agency Quinn Emanuel stated Monday that bondholders have employed the agency to “represent them in discussions with Swiss authorities and possible litigation to recover losses.”
