The chairperson of Credit Suisse said Tuesday he was “truly sorry” as he apologized to shareholders for the failures of the once-venerable bank, acknowledging the shock and anger felt as the troubled Swiss lender is set to be swallowed up by rival UBS in a government-arranged takeover.
The hastily arranged takeover, for which Switzerland invoked emergency legislation, bypassed Credit Suisse shareholders, who would otherwise have had a say, and all but wiped them out.
Axel Lehmann, who took the top board job only last year after joining Credit Suisse from UBS in 2021, decried “massive outflows” of customer funds in October and a “downward spiral” that culminated the previous month as a U.S. banking crisis unleashed global turmoil.
Lehmann apologized, 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,” he said. “I apologize that we were no longer able to stem the loss of trust that had accumulated over the years and for disappointing you.”
“The bank could not be saved,” he stressed, and only two options awaited – a deal or bankruptcy.
“The bitterness, anger and shock of those who are disappointed, overwhelmed and affected by the developments of the past few weeks are palpable,” Lehmann told what is likely the last Credit Suisse shareholder meeting in its 167-year history.
It marks an ignominious end to the 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, including some hoisting a boat labeled “Crisis Suisse,” gathered outside the Zurich hockey arena hosting the annual general meeting and shareholders voiced their anger as they got their last crack at managers following a collapse of the bank’s stock price over the last decade and an impending merger engineered to sidestep investor approval.
One by one, shareholders and employees stepped to a podium to lay out their grievances and ask questions. One sought a precise listing of assets under management, another blasted “bonus mania,” and one used a metaphor from Christianity to ask, “When is enough, repeatedly enough?”
Yet another held up walnuts as props, saying, “A bag of these is worth about one share.” One young investor took off his shirt to reveal a T-shirt with the words “Stop the Swindle” written in red.
For the thousands in the cavernous arena, many retirees, the speeches were generally met with polite applause and a few bursts of laughter.
Shareholder Guido Röthlisberger said he wore a red tie “to represent that I and plenty of others today are seeing red.”
“I rather feel that I’ve been cheated by these institutions,” he said.
Swiss government officials hastily orchestrated the $3.25 billion takeover of Credit Suisse by UBS two weekends ago after Credit Suisse’s stock plunge intensified and more jittery depositors pulled their money. Political leaders, financial regulators, and the central bank feared a teetering Credit Suisse could further roil global financial markets following the collapse of two U.S. banks.
Shareholders did not get to vote on the deal after the government passed an emergency ordinance to bypass the step. Instead, some came to the annual meeting to hear managers explain what went wrong.
“The whole thing – how this happened – makes me a little bit angry,” said shareholder Markus Huber, 56, as he lined up to attend his first Credit Suisse annual gathering.
Huber, self-employed in handyman services, suspected government officials and bank leaders cooked up the deal “in secrecy” and said there should have been greater transparency.
Shareholders felt “a little bit astonished that there hadn’t been warnings out before,” he said.
The takeover, however, isn’t on the docket for the shareholders’ meeting, the first held in person in four years because of the COVID-19 pandemic. Instead, the pared-down agenda includes discussion on issues like a dividend of about 5 cents per share, the reelection of the board, and granting a form of approval to managers for most of their actions running the bank.
Credit Suisse swooned from scandal to scandal in recent years: Bad bets on hedge funds, accusations of not reporting secret offshore accounts held by wealthy Americans to avoid paying U.S. taxes, failing to do enough to prevent money laundering by a Bulgarian cocaine ring.
On Monday, the Swiss federal prosecutor’s office announced it had opened a probe into events surrounding Credit Suisse ahead of the UBS takeover. Executives hope the deal will close in the coming months but acknowledged a complex transaction.
A couple of dozen activists, including one wearing a mask of the head of the Swiss central bank, took parting shots at Credit Suisse: Some held signs decrying the bank’s ties to Mozambique, where the lender was found to have violated anti-money-laundering rules that led to nearly $700 million in settlements to British and U.S. authorities.
Environmentalists, meanwhile, lashed out at Credit Suisse’s investments in oil and natural gas – a longstanding complaint.
For Credit Suisse investors, the takeover deal has meant losses. Shareholders collectively will get 3 billion francs in the combined company, while investors holding about 16 billion francs ($17.3 billion) in higher-risk Credit Suisse bonds were wiped out.
Typically, shareholders face losses before those holding bonds if a bank goes under.
Swiss regulators defended the move, saying contracts show the bonds can be written down in a “viability event.” Regulators will hold a news conference Wednesday.
On Monday, global law firm Quinn Emanuel said bondholders have hired the firm to “represent them in discussions with Swiss authorities and possible litigation to recover losses.”
