Credit Suisse’s chairman (CSGN.S) apologised for taking the bank to the brink of bankruptcy on Tuesday, as he faced shareholder fury over the abrupt demise of a national icon.
The hastily arranged takeover by Zurich-based UBS (UBSG.S), for which Switzerland invoked emergency legislation, bypassed Credit Suisse shareholders, who would otherwise have had a say, and all but wiped them out.
Its final meeting of shareholders on Tuesday marks an ignominious end to the 167-year-old bank founded by Alfred Escher, a Swiss magnate affectionately dubbed King Alfred I, who helped to build the country’s railways and then the bank.
Protesters gathered outside the concert venue where the meeting took place, with some erecting a capsized boat, to depict the bank’s demise.
Inside, chairman Axel Lehmann issued an apology to the nearly 2,000 shareholders in attendance, saying he had run out of time to turn the bank around, despite his belief “until the beginning of the fateful week” that it could survive.
“I am truly sorry,” said Lehmann. “I apologise that we were no longer able to stem the loss of trust.”
With his voice breaking, he said: “Credit Suisse with its long and rich history is now taking a historic turn, we deeply regret this and, personally, this moment also makes me sad.”
After years of scandal and losses, Credit Suisse came to the brink of collapse before UBS rode to the rescue with a merger engineered and bankrolled by the Swiss authorities.
“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,” said Lehmann. He added that five board members would not stand for re-election.
One after another, shareholders took to the stage to voice their anger at the arranged marriage between the two banks and at the raw deal for investors.
Shareholders criticised the board of directors and former management, including Urs Rohner, who was chairman for the ten years to 2021.
Shareholder advisory firm Ethos decried the “greed and incompetence of its managers” as well as pay that reached “unimaginable heights”.
“Shareholders have lost considerable amounts of money and thousands of jobs are on the line,” it said.
The meeting is the first time that Chairman Lehmann and Chief Executive Ulrich Koerner publicly addressed shareholders since the takeover.
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.
The move angered not only shareholders but many in Switzerland. A survey by political research firm gfs.bern found a majority of Swiss did not support the deal.
“The government’s use of emergency powers to push this deal through goes beyond legal and democratic norms,” said Dominik Gross of the Swiss Alliance of Development Organisations.
“Swiss taxpayers too are on the hook for billions of francs of junk investments and yet the government, (regulator) FINMA and the central bank have given little explanation about the state’s 9 billion (franc) 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 in favour of re-electing Lehmann as chairman – far fewer than usual and a sign of dismay. The six remaining board members were also narrowly re-elected.
The shareholders also approved pay for the board of directors for the time until the merger is complete but voted against approving compensation for the bank’s executives.
U.S. proxy adviser Institutional Shareholder Services (ISS) had earlier rebuked the bank’s management for a “lack of oversight and poor stewardship”.
In the lead-up to Tuesday’s meeting, Credit Suisse said it had withdrawn certain proposals from the agenda.
Those included 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 also 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.
($1 = 0.9129 Swiss francs)