Credit Suisse chair Axel Lehmann apologised to angry shareholders at the bank’s last annual general meeting today in Zurich for failing to turn around the beleaguered bank that was forced into a rescue takeover by UBS last month.
Lehmann told shareholders that he understood the “bitterness, anger and shock of all those who are disappointed, overwhelmed and affected by the developments of the past few weeks”.
Lehmann said that although he was confident in the bank’s turnaround plans, the plan didn’t have time to “bear fruit”.
“The period from October to March was not enough,” he said. “In that fateful week in March our plans were thwarted… and for that I’m truly sorry”.
Chief executive Ulrich Körner agreed, saying “we were executing at pace and making good progress,” but the bank “ran out of time”.
Credit Suisse faced massive deposit outflows and a spiralling share price earlier in March after its top investor ruled out providing more funding.
Over the following weekend UBS agreed to buy Credit Suisse for $3.25bn, less than half of Credit Suisse’s market capitalisation at the end of the week to avoid wider financial instability.
Shareholders crystallised enormous losses and were prevented from voting on the deal, as they normally would have done, by government legislation.
The events that led to Credit Suisse’s collapse took place just a week after the collapse of Silicon Valley Bank. Lehmann highlighted this context, saying the bank collapsed “following fears about contagion from US banks… social media fanned the flames of these fears”.
In the end, Lehmann said the UBS’ shotgun acquisition of Credit Suisse had to go through.
“Deal or bankruptcy – the merger had to go through. The terms had to be accepted,” he said.
“Those who are at the helm at the end, are responsible, too. Hence, including me,” he added.
However, a number of shareholders pointed out that Credit Suisse’s problems were much more deep-rooted.
Vincent Kaufman of the Ethos Foundation said “numerous scandals in Credit Suisse in the last few years have completely ruined the bank”.
Another said the bank has faced problems well beyond last October. “Managers for 15 years have constantly crossed the line… [which] put the bank at risk and that’s why this happened”.
Kaufman and many others put emphasis on the bank’s excessive bonus culture which promoted excessive risk taking.
In the hall, shareholder after shareholder took to the stage to criticise the “fiasco” at Credit Suisse.
In a bizarre intervention one shareholder said: “I can only remind you of what would have happened to you in medieval times, you would have been crucified.”
Another brought in a packet of walnuts to give to Lehmann purchased for the same prize as a Credit Suisse share. The disgruntled shareholder had removed the nut, but put the shell back together.
The government did not escape criticism either. One said “our political masters have been dozing on the job for the last 15 years”.
Shareholders voted in favour of all but one of the proposals up for a vote. This means Lehmann and the other seven directors who stood for re-election will remain in post until the takeover is completed.
However, over 43 per cent of shareholders voted against the re-election of Lehmann and shareholders rejected the motion on fixed compensation for members of the executive board over the next few months. Lehmann said the board will go away and consider next steps.
Shareholders will vote on proposals to re-elect directors, including chair Axel Lehmann, later in the day while UBS will hold its AGM tomorrow.