ZURICH — The chairman of Credit Suisse apologized Tuesday to shareholders for failures of the once-venerable bank and acknowledged the shock and anger felt as the troubled Swiss lender is set to be swallowed up by rival UBS in a government-arranged takeover.
Axel Lehmann, who took the top board job only last year after joining Credit Suisse from UBS in 2021, decried the “massive outflows” of customer funds in October and a “downward spiral” that culminated last month as turmoil from a U.S. banking crisis spilled overseas.
“The bank could not be saved,” he said, 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 is palpable,” Lehmann told what is likely the last Credit Suisse shareholder meeting in its 167-year history.
“I apologize that we were no longer able to stem the loss of trust that had accumulated over the years and for disappointing you,” he said.
Protesters, including some hoisting a boat labeled “Crisis Suisse,” gathered outside a Zurich hockey arena hosting the meeting and some 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.
In 2007, Credit Suisse shares fetched as much nearly 88 Swiss francs (dollars). Today, they’re trading at about 80 cents.
As the stock skid worsened and jittery depositors pulled their money, Swiss government officials hastily orchestrated a $3.25 billion takeover by UBS two weekends ago. 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.
Crosstown competitor UBS has been known for a more conservative culture after surviving the 2008 financial crisis, thanks in part to a government bailout. Executives hope that the deal will close in coming months but acknowledged a complex transaction.
Some shareholders, who did not receive a vote on the takeover after the government passed an emergency ordinance to bypass the step, came 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 meeting.
Huber, who is 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 annual general meeting, the first held in person in four years because of the COVID-19 pandemic. The pared-down agenda includes discussion on issues like a dividend of about 5 cents per share, the reelection of the board under Lehmann 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 violating a U.S. plea deal by failing to report secret offshore accounts held by wealthy Americans to avoid paying taxes; failing to do enough to prevent money laundering by a Bulgarian cocaine ring.
The Swiss federal prosecutor’s office on Monday announced it has opened a probe into events surrounding Credit Suisse ahead of the UBS takeover.
A couple 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 bank was found to have violated anti-money-laundering rules and paid 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. Six years ago, about a dozen activists led a peaceful protest by donning tennis outfits and whacking balls in a bank branch near Lausanne, riffing off Roger Federer’s role as a bank pitchman.
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 have defended the move, saying contracts for the higher-risk bonds show that they can be written down in a “viability event,” particularly if the government offers extraordinary support.
That happened under the Swiss executive branch’s emergency measures, regulators say.
Global law firm Quinn Emanuel said Monday that bondholders have hired the firm to “represent them in discussions with Swiss authorities and possible litigation to recover losses” following the merger announcement.
