GENEVA – UBS shareholders get their first chance to grill the bank’s bosses today over its shotgun marriage to Credit Suisse, done in double-quick time behind their backs.
Switzerland’s biggest bank is absorbing its stricken closest domestic rival in a deal stitched together on March 19 out of fears of a global banking crisis if the floundering Credit Suisse went under.
But some UBS shareholders may have concerns closer to home as to what it means for their personal investments now the bank is taking on an institution that repeatedly got itself into trouble.
Shareholders of both banks had no say in the mega-merger, which was engineered behind closed doors by the Swiss government, the central bank and the financial regulators.
Today’s annual general meeting (AGM) takes place in Basel, one of the two birthplaces of UBS along with Zurich.
The AGM is being held in the St. Jakobshalle indoor arena, famously the stomping ground of Swiss tennis great Roger Federer – Credit Suisse’s top brand ambassador.
Bad culture concern
The meeting will see Dutch chief executive Ralph Hamers bow out. Once the AGM is over, Sergio Ermotti returns as CEO, having been called back to UBS to handle the delicate integration process.
The 62-year-old Swiss banker ran UBS between 2011 and 2020, having been brought in to restructure and stabilise the bank after its state bailout during the 2008 global financial crisis, followed by the 2011 losses of a rogue trader who blew US$2.3 billion (RM10.11 billion).
UBS chairman Colm Kelleher said he felt Ermotti would be the “better pilot” for the bank’s new flight path than the digital transformation-focused Hamers, who will stay on for a handover period.
UBS will become a banking colossus, with US$5 trillion of invested assets.
Kelleher has voiced his concerns about not only the execution risks in carrying out the merger but also about the dangers of “bad culture” from Credit Suisse, primarily in its investment banking, bleeding into UBS.
There are also the numerous disputes accumulated by Credit Suisse that UBS will have to settle, after having already spent several years settling its own.
Risky business
Roger Said, director of the Swiss shareholder organisation Actares, said that Ermotti “will have to put an end to the irresponsible risk culture that has existed for years at Credit Suisse, as well as drastically reduce risky business sectors”.
The annual general meeting comes the day after Credit Suisse held its final AGM before the 167-year-old bank is swallowed up by UBS.
Credit Suisse chairman Axel Lehmann said he was “truly sorry” that the national institution could not be saved as he faced angry and tearful shareholders whose money has gone up in smoke.
He said that “ultimately there were only two options: deal or bankruptcy”.
UBS shares closed up 0.2% yesterday at 18.77 Swiss francs each, while the Swiss stock exchange dropped 0.2%.
Credit Suisse shareholders have seen the value of their investment plunge from 12.78 Swiss francs per share in February 2021 to the 0.76 francs they will receive in the US$3.25-billion merger.
The Ethos foundation, which represents pension funds in Switzerland and owns stakes in both banks, said Credit Suisse shareholders were mobilising to get UBS to think about giving them more than 0.76 francs per share.
“There are bases being created to potentially go to court to request a review of the exchange ratio,” its director Vincent Kaufmann told AFP. – AFP pic, April 5, 2023
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