Zurich’s Turmoil: A Dismal End to a Storied Bank
Zurich was abuzz with disarray, as Credit Suisse Chairman Axel Lehmann somberly apologized for steering the once-illustrious Swiss bank perilously close to bankruptcy. Shareholders, their voices laced with indignation, lambasted the institution’s precipitous decline. Swift intervention by UBS—a rescue enabled by Switzerland’s emergency legislation—sealed the bank’s fate. This development, however, left shareholders with scant recourse, their investments all but eradicated.
An inglorious conclusion awaits the 167-year-old bank, the brainchild of Swiss tycoon Alfred Escher. The scene was set with protesters converging upon the meeting venue, a capsized vessel serving as a poignant symbol of the bank’s demise.
Lehmann’s Lament: A Tearful Apology Amid Shareholder Ire
As the final shareholders’ meeting unfolded, Chairman Lehmann expressed remorse, conceding his inability to revive the struggling bank, which he thought could persist until the “beginning of the fateful week.” His anguish palpable, he mourned the erosion of the bank’s once-stalwart trust.
A litany of scandals and losses had left Credit Suisse teetering on the edge before UBS intervened, a merger bolstered by Swiss authorities. Lehmann grimly explained that the bank faced two stark choices: strike a deal or embrace bankruptcy.
Ethos, a shareholder advisory firm, rebuked Credit Suisse’s management for its “greed and incompetence” and excessive compensation packages, poised to confront top executives at the meeting.
A Rare Glimpse: Lehmann and Koerner Address Shareholders
The gathering marked the first occasion on which Chairman Lehmann and CEO Ulrich Koerner spoke to shareholders since the takeover. Credit Suisse had been grappling to overcome its checkered past and reorganize when Silicon Valley Bank’s collapse in the U.S. sparked a devastating chain reaction.
A run on deposits prompted the Swiss government to engineer a rescue by UBS, which consented to acquire Credit Suisse for a paltry 3 billion Swiss francs ($3.3 billion)—a mere shadow of its erstwhile market value. This decision incensed not only shareholders but also numerous Swiss citizens, with a majority opposing the deal according to a survey by political research firm gfs.bern.
Unprecedented Measures: Legal and Democratic Norms Challenged
Dominik Gross, affiliated with the Swiss Alliance of Development Organisations, asserted that the government’s employment of emergency powers to force the deal contravened legal and democratic standards. Swiss taxpayers now bear the burden of billions of francs in unsavory investments, while the government, regulator FINMA, and the central bank have provided scant clarification regarding the 9 billion franc loss guarantee proffered to UBS.
In an emphatic display of dissent, Norway’s sovereign wealth fund—one of the world’s most prominent investors—announced its intention to vote against the re-election of Lehmann and six other directors. U.S. proxy adviser Institutional Shareholder Services (ISS) had previously chastised the bank’s management for its “lack of oversight and poor stewardship.”
Credit Suisse, prior to the meeting, withdrew several proposals, including the discharge of management and a special bonus tied to the bank’s transformation plan. The near-collapse also obliterated $17 billion of Additional Tier 1 (AT1) debt, prompting a coalition of AT1 investors to enlist a law firm to seek compensation. The Swiss Federal Prosecutor has commenced an investigation into the bank’s downfall, while Lehmann and other executives brace for potential legal repercussions.
