ZURICH, April 4 (Reuters) – The head of Credit Suisse ( CSGNS ) apologized for bringing the Swiss bank to the brink of bankruptcy as it faced shareholder anger over the demise of its once-proud flagship.
The hastily arranged takeover by Zurich-based UBS ( UBSG.S ), for which Switzerland invoked emergency legislation, defied Credit Suisse shareholders.
A final meeting of its shareholders on Tuesday marked the ignominious end of the 167-year-old bank, which Swiss tycoon Alfred Escher, affectionately known as King Alfred I, helped build the country’s railways and later the bank.
Demonstrators gathered outside the concert hall where the meeting took place, some setting up an overturned boat to depict the bank’s demise.
Inside, chairman Axel Lehman apologized, saying time had run out to turn the bank around, despite hopes it could survive “until the start of the miracle week”.
“I’m truly sorry,” Lehman said. “I apologize that we could no longer prevent the loss of trust.”
After years of corruption and losses that brought Credit Suisse to the brink of collapse, UBS stepped in to rescue it with a merger underwritten and bankrolled by Swiss authorities.
“Until the end, we fought hard to find a solution. But in the end, there were only two options: contract or bankruptcy. The merger had to go.”
Shareholder consultancy Ethos dismissed the “greed and incompetence of its managers” and pay that had reached “unimaginable heights”, as it prepared to challenge top executives at the meeting.
“Shareholders have lost significant amounts of money and thousands of jobs are on the line,” it said.
First public address
It was the first meeting where Chairman Lehman and Chief Executive Ulrich Koerner publicly addressed shareholders.
Credit Suisse tried to put the past behind it and restructure, before the shock triggered by the collapse of Silicon Valley Bank in the US sent it into a tailspin.
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 previous market value.
The move angered not only the shareholders but also many in Switzerland. A survey by political research firm gfs.bern found that a majority of Swiss did not support the deal.
“The government’s use of emergency powers to implement this agreement goes beyond legal and democratic norms,” said Dominique Gross of Swiss Development Organisations.
“Even Swiss taxpayers attract billions of francs in junk investments, yet the government, (regulator) FINMA and the central bank have given little explanation about the state’s 9 billion (franc) loss guarantee to UBS.”
Norway’s sovereign wealth fund, one of the world’s biggest investors, said it would vote against the re-election of Lehman and six directors.
US proxy adviser Institutional Shareholder Services (ISS) has previously slammed the bank’s management for “lack of oversight and poor stewardship”.
Ahead of Tuesday’s meeting, Credit Suisse said it had withdrawn some proposals from the agenda.
They include the exodus of management, which is usually a beacon of hope. It also scrapped plans for special bonuses tied to the bank’s turnaround plan.
Credit Suisse’s collapse also wiped out $17 billion of Additional Tier 1 (AT1) debt.
A group of AT1 investors has hired law firm Quinn Emmanuel Urquhart & Sullivan to seek compensation.
Meanwhile, on Sunday the Attorney General’s Office, Switzerland’s federal prosecutor, opened an investigation into the Credit Suisse takeover.
($1 = 0.9129 Swiss Francs)
Report by Noel Illion; Editing by Lincoln Feist, Jason Neely and Barbara Lewis
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