Shareholders demand answers about bailout deal with UBS

Credit Suisse chairman Axel Lehmann told shareholders on Tuesday he was “really sorry” for the collapse that led to the bank’s controversial takeover by UBS.

“It is a sad day for you and for us as well,” Lehman told the bank’s annual meeting. “I can understand the bitterness, anger and shock of all those who have been disappointed, overwhelmed and affected by the developments.”

“I apologize that we can no longer stop the loss of confidence that has accumulated over the years, and your frustration.”

A police presence was established early Tuesday at the venue, as contributors began arriving in droves, hoping for answers and accountability.

Swiss authorities brokered an emergency bailout of the damaged bank by its larger domestic rival for just CHF3 billion, over the course of a weekend in late March. This came after the collapse of Credit Suisse’s deposits and share prices amid fears of a global banking crisis, but the deal is still mired in legal and logistical challenges. Neither UBS nor Credit Suisse shareholders were allowed to vote on the deal.

In a statement on Sunday, the Attorney General’s Office confirmed that the Swiss Federal Prosecutor General is investigating possible violations of Swiss federal law by government officials, regulators and senior executives at Credit Suisse and UBS.

The two banks declined to comment on Monday.

Commentators have highlighted the importance of the deal’s success to the Swiss authorities against a frantic political backdrop. The lack of input from shareholders, bondholders and Swiss taxpayers in UBS’ takeover of its embattled rival has sparked widespread outrage.

Speaking outside the annual meeting, Vincent Kauffman, CEO of Ethos that represents pension funds that hold between 3% and 5% of Credit Suisse shareholders, told CNBC that they have “lost a lot of money” and “need to see what management is doing.”

Possible actions, he said, include “attempting to recover some of the viable remuneration awarded to previous management, who may have failed in their duties to protect the interests of shareholders.”

“We are still looking at possibilities – it is very difficult with Swiss company law to prove harm. Corporate mismanagement per se is not something we can act concretely against former members of management or current members of management, but still we need to make sure They gave the whole truth to the investors and the market, so it’s still an open question.”

Holders of Credit Suisse’s AT1 bond instruments, which were subject to a $17 billion sweep as part of the UBS acquisition, last week instructed a global law firm to pursue discussion and possible litigation with Swiss authorities.

“There remains an opportunity for the various players to recognize and correct the mistakes made in organizing this merger in haste,” said Thomas Werlin, managing partner at Quinn Emanuel Urquhart & Sullivan, which represents a “diverse group” of affected bondholders in Switzerland. The United States and the United States, in a statement released on Monday.

“While we are certainly prepared to pursue whatever actions are necessary, potentially constructive engagement with relevant stakeholders can prevent years of litigation. That will be an important focus for us over the coming weeks.”

UBS announced last week that former CEO Sergio Ermoti would return to helm the new bank as he takes on the mammoth task of integrating his collapsing compatriot into its business.

UBS will hold its Ordinary General Meeting on Wednesday, with more clarity expected on plans for the new integrated lender. Swiss regulator FINMA will also hold a press conference on Wednesday.

The Swiss newspaper Tages-Anzeiger reported Sunday, citing one source, that plans for the new entity include a 20%-30% cut in its combined global workforce.