Credit Suisse braced for backlash over UBS rescue at shareholder meeting

A Credit Suisse shareholder meeting in Zurich, April 2017. © Keystone / Eq Images / Melanie Duchene

Credit Suisse is bracing for a tumultuous annual shareholder meeting on Tuesday, when protesters are expected to vent their anger at the implosion of one of Switzerland’s historic financial institutions.

The meeting will take place at a 15,000-capacity ice hockey stadium in the Zurich suburb of Oerlikon. It will be the bank’s first in-person AGM for four years and its last as an independent company after 167 years at the centre of the Swiss economy.

The board is expected to bear the brunt of investors’ anger over the bank’s rescue two weeks ago by its rival UBS. Shareholders of both banks were denied a vote on the $3.25 billion (CHF2.98 billion) takeover thanks to emergency measures taken by the Swiss government to rush the deal through.

There is fear among Credit Suisse executives that the event could attract more vehement protests from Swiss citizens, who are outraged by the bank’s rapid decline and litany of recent scandals.

More than three-quarters of Swiss voters want the combined mega bank to be split up by new legislation, according to opinion polls.

Credit Suisse withdrew two votes from its AGM agenda last week, saying they were no longer necessary because of the takeover. The first was a vote on whether members of the board should be absolved of legal responsibility for the 2022 financial year. The second was on whether executives should receive a special SFr30.1mn bonus for completing the five-year restructuring that started last year.

Proxy advisers ISS, Glass Lewis and Ethos Foundation had recommended shareholders vote against the so-called “discharge” vote, which is common in Swiss AGMs, as well as the bonus.

The Norwegian sovereign wealth fund, which is a top 10 independent shareholder in the bank, announced on Friday that in addition to voting against discharging the board and for the special bonus, it would also vote against the majority of directors.

Norges Bank Investment Management said it would vote against chair Axel Lehmann, along with longstanding directors Iris Bohnet, Christian Gellerstad, Shan Li, Seraina Macia, Richard Meddings and Ana Pessora.

“Shareholders should have the right to seek changes to the board when it does not act in their best interest,” Norges said.

“We will . . . take into consideration unsatisfactory financial and strategic performance, mismanaged risk-taking, unacceptable treatment of stakeholders or undesired environmental or social outcomes from company operations.”

Glass Lewis had recommended shareholders vote against Lehmann due to the lack of information the board provided over conflicts of interest regarding an agreement Credit Suisse had in place to transfer much of the investment bank to former director Michael Klein.

The proxy adviser also raised conflict of interest concerns surrounding director Blythe Masters, who acted as an adviser to Apollo Global Management while Credit Suisse was negotiating with the US private equity group over the sale of its securitised products business.

Glass Lewis recommended shareholders vote against board member Mirko Bianchi for his role as chair of the audit committee after flaws were identified in the bank’s internal controls.

Only registered shareholders and members of the media will be able to attend the meeting. Attendees will have to show identification and pass through security.

Lehmann and chief executive Ulrich Körner will address the audience and then invite questions from the floor, a process that is expected to take several hours as shareholders vent their frustration.

UBS’s own AGM, which will take place on Wednesday at the 12,400-seater St Jakobshalle arena in Basel, is expected to be a less raucous affair.

Proxy advisers have not recommended investors vote against meaningful parts of UBS’s meeting agenda and shareholders have so far been comfortable with the potential upside of the Credit Suisse takeover, despite being denied a say on it.

UBS shares have risen more than 10 per cent since the deal was announced.

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