The money house still has to apply for approval under EU merger control regulations, the EU Commission announced on Tuesday. Under these rules, companies can only complete mergers following obtaining approval from EU antitrust authorities. Penalties of up to ten percent of the total turnover are threatened for violations.
The EU authority announced that the Swiss banks had asked for an exception to this rule. Credit Suisse is being taken over by UBS for CHF 3 billion in a Swiss government-orchestrated bailout. According to insiders, the British central bank Bank of England has already approved the takeover of Credit Suisse by UBS in Great Britain.
The announcement was made shortly following the last shareholder meeting of the Swiss crisis bank. The shareholders vented their anger and disappointment at the end of the money house. Their anger related not only to the decline of the almost 167-year-old institute, but also to the actions of the state and management in the planned emergency takeover by larger rival UBS. Only half of the shareholders voted for the re-election of the chairman of the board of directors, Axel Lehmann.
No majority
There was no majority at all for the remuneration of the group management around bank boss Ulrich Körner for the time until the completion of the takeover. The shareholders have no say in the deal itself. The bank’s top management defended the takeover by UBS as the only viable option. “We struggled to find solutions until the end. But in the end there was only the option ‘deal or bankruptcy’,” said Lehmann at the annual general meeting in Zurich on Tuesday. He apologized for “not being able to stop the loss of trust that had accumulated over the years”.
UBS is to take over Credit Suisse over the next few months for 3 billion Swiss francs (a good 3 billion euros). This step as an alternative to bankruptcy was extremely important, said bank boss Ulrich Körner. “The collapse of Credit Suisse would have been a disaster for the global economy and for Switzerland.”
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Many Credit Suisse shareholders also see a catastrophe in their portfolios. With the fixed takeover price, which will be paid out in UBS shares, the shareholders of the crisis bank have had to accept a loss of around 70 percent on their shares this year alone. Credit Suisse shares had already lost immensely in value in previous years following the institute was still considered a model bank following the global financial crisis of 2008.
Shareholders are bitter
Shareholders were bitter and demanded consequences. “As a shareholder, I feel – yes, in Swiss German they say – crappy,” said one shareholder. Last but not least, serious mistakes were made in monitoring the bank. “You have hurt this country,” said another. “As a former employee and shareholder of Credit Suisse, I am ashamed that I might not have prevented this entire mess.”
Another shareholder criticized the “mismanagement” and the company’s previous bonus culture, which had led to lavish distributions to managers and other employees despite weak results. Chairman of the Board of Directors Lehmann showed understanding for the criticism. “It was our turn to address this point precisely: when things go well, there is a bonus, and when things go badly, there is none.”
Criticism also rained down on the state’s urgent rescue action. The matter was decided faster than it took other people to set up a smartphone, said one shareholder.
The Ethos shareholders’ association called for the responsibilities for the bank’s serious difficulties to be determined. “We have all suffered irreversible financial damage,” said their representative Vincent Kaufmann. The intervention of the authorities was necessary. However, it is not clear that Credit Suisse should only be worth a fraction of its equity.
No lawsuits
According to Lehmann, the bank has not filed any lawsuits once morest former managers, i.e. managers or board members. However, bonuses that have not yet been paid out would be reviewed. A shareholder’s request for a special audit in connection with the takeover met with little approval.
Meanwhile, the shareholders re-elected Lehmann with 55.7 percent as head of the board of directors, and the other members of the reduced body also received a majority. A total of around 1,700 shareholders were present – significantly more than at the last face-to-face event in 2019 before the three-year Corona break.
The shareholders rejected the fixed salary for the group management for the period up to the takeover. Now the supervisory body must examine the next steps, said Lehmann. Meanwhile, shareholders approved the board’s compensation, albeit narrowly.
