Red numbers and a sovereign wealth fund wants to know exactly

Uncomfortable days await Credit Suisse. On Wednesday, they will be giving out deep red numbers for the first quarter. The General Assembly is scheduled to take place on Friday and will witness the catastrophe of the past few years.

The series of bankruptcies and accidents for the second largest Swiss bank continued into the new year. At least since last Wednesday’s earnings warning, it has become clear that CS is starting the new year with a heavy loss.

The result is burdened with the colossal judgments of legal disputes and the effects of the war in Ukraine. In their estimates, analysts expect an average quarterly loss of around CHF250 million.

We have a tough week ahead: CS CEO Thomas Gotstein.Photo: Keystone/Watson

Poor work environment

According to CS, most of the 700 million Swiss francs in the quarter’s legal rulings relate to legal issues “dating back more than a decade”. According to observers, it is likely that a large part of the fraudulent activities of a former CS client consultant in Geneva.

In March, a Bermuda court ordered CS to pay more than $500 million to former Georgian Prime Minister Bidzina Ivanishvili, who was defrauded by the chancellor.

However, the effects of the war in Ukraine were also felt directly by the CS through “negative profits and appropriations for loan losses”. Participation in the Allfunds platform, which has delivered good revaluation gains in previous quarters, is now sharply lowering the score.

oscillating executive chairs

But the quarter was also heavily burdened by the generally deteriorating business environment for the banking industry. CS will likely be severely affected by its reorganization and abandonment of business areas in the wake of the Archegos disaster. Analysts expect earnings to fall by a third by roughly half from a very strong first quarter.

It also cannot be excluded that other persons from the administration will have to vacate the chair. The positions of chief lawyer Romeo Cerruti, chief financial officer David Mathers and head of business in Asia, Hellmann Situhang, are on the brink, NZM Sonntag reported.

CS’s reports were covered on reports and stated that the bank’s management “regularly deals with the issue of succession planning and appointments to certain senior positions”. But no decisions were made.

GV in live

The many unfortunate incidents of the 2021 “Annus Horribilis” will be discussed again at the CS General Assembly on Friday. The event takes place without the contributors present – perhaps not only unfortunately from CS management. Contributors can follow the event via live broadcast. Until Tuesday, they now have the opportunity to voice their concerns or criticize them via pre-provided questions.

The proposal to discharge the Board of Directors and management for fiscal years 2020 and 2021 is to be particularly exciting at the shareholder meeting. Last year, the 2020 discharge proposal was withdrawn by the Board of Directors under the impression of the multi-billion dollar Archegos disaster.

Discharge 2020

Now the 2020 discharge grant application is again in focus – although the issues surrounding the collapse of the “Greensell Fund” have been explicitly ruled out. Not only the traditionally critical shareholder union Ethos, but also influential voting rights advisors ISS and Glass Lewis are recommending a layoff for 2020.

Anglo-Saxon voting rights advisers point out the massive risk and control problems identified in the investigations. In the event that he is discharged from office, the board of directors and management cannot be held responsible. While Ethos also refuses to dump 2021, ISS and Glass Lewis recommend admissions in this case.

Request a special examination

There would likely be little chance for Ethos to conduct a private scrutiny of the Grensell case and media revelations about the so-called “Switzerland secrets,” even if it also has the backing of Norway’s sovereign wealth fund (see infobox below). On the other hand, ISS and Glass Lewis rejected the request citing the high level of effort and pending actions against the bank. Climate protection approaches by Ethos and Actares are unlikely to stand a chance.

The election of board members, including the new chairman of the board, Axel Lehmann, should go smoothly. CS Vice President and President of Roche Severin Schwan, who came under criticism, stopped running. Kay Nargulwala, the longtime head of the compensation commission, and Juan Colombas, who is considered a close friend of Horta Osorio, decided not to run again. (sda/awp)

CS major contributor supports demand for private audit

The Norwegian sovereign wealth fund is supporting a special audit of the large bank, as required by Ethos. In addition, the major shareholder of CS and the world’s largest sovereign wealth fund, one of the bank’s 15 largest shareholders with a 1.3 percent stake, will not discharge the board and management at the general meeting next Thursday of 2020.

This stems from a document about voting decisions on the fund’s website, which the Financial Times had previously reported. The document states that “shareholders should have the right to request changes to the board of directors if it is not acting in their best interest.” Influential voting rights advisers ISS and Glass Lewis had previously advised against dismissing management.

By also agreeing to the special review requested by the Ethos Foundation, Norway’s sovereign wealth fund is going one step further than other players. Ethos requested an independent private audit under Section 697a or in the case of supply chain funds – known as the Greensell case – and in the case of the so-called Switzerland secrets. (awp/sda)

Actares requires a climate statue modification

Credit Suisse’s shareholders’ meeting was harshly criticized in the run-up to the general meeting. It’s demanding clean risk management from the big bank and amending laws in favor of the climate.

Actaris wrote in a statement Monday that they have heard many positive intentions from CS in direct discussions. But after losses from the Grencelle, Archegos, and Lyskodron cases and earnings warning, confidence in the bank in terms of risk management and company culture has hit rock bottom.

Actaris also criticizes the nomination of Chinese economics professor Qiu Jin for the board of directors. The election of a candidate close to the regime, which justifies the detention of Uyghurs violating human rights, violates the company’s own values.

CS also doesn’t provide a figure on the climate issue, the shareholders’ meeting continues. Although recent climate commitments are welcome, skepticism is required given the bank’s track record to date.

Actaris demands that climate protection efforts be implemented “with violence” and externally validated. Together with representatives of other contributors, Actaris is calling for an amendment to the Articles of Association in order to solidify and report on the Climate Strategy. (awp/sda)

All Swiss banknotes since 1907

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All Swiss banknotes since 1907

Source: Keystone / Laurent Gillieron

This is how it was at that time with the first ATM in Switzerland

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