Credit Suisse Holders Revolt on Archegos, Reject Greensill Audit
(Bloomberg) -- Credit Suisse Group AG shareholders voted not to absolve the bank’s board of directors from legal liability for mistakes made in the run-up to the Archegos Capital Management debacle, while rejecting an attempt to force a special audit of the Greensill Capital losses.
About 60% of shareholders represented at the Zurich-based bank’s virtual annual general meeting voted against the usual step of discharging liability for the 2020 results, according to a webcast of the meeting Friday. That leaves open the possibility of further lawsuits over the more-than $5 billion Archegos loss.
At the same time, shareholders decided to strike down a proposal by the Ethos Foundation, seven Swiss pension funds and the Norwegian sovereign wealth fund for a special audit over the collapse of a $10 billion group of supply chain finance funds it ran with now-defunct Greensill, after the bank refused to publish an internal report on the matter.
The Archegos and Greensill blow-ups dealt Credit Suisse its worst year since the financial crisis in 2021, prompting a significant overhaul of management and board shakeup. The twin hits struck the bank just weeks before last year’s shareholder meeting and prompted it to withhold the vote of discharge at the time.
The bank has said publishing more details of the Greensill affair could jeopardize recovery efforts for the remainder of investor’s money in the funds, which is tied up with difficult borrowers and claims to insurers.
The Zurich-based bank does not need “grandiose announcements and promises but humility and consistent execution,” in addressing the bank’s problems, Chairman Axel Lehmann said in a his first public remarks addressing shareholders at the meeting on Friday.
Credit Suisse on Wednesday named former UBS Group AG general counsel Markus Diethelm as its new top lawyer, replacing Romeo Cerutti, as the bank gears up for legal battles on multiple fronts.
Chief Executive Officer Thomas Gottstein is seeking to convince shareholders that his strategy for turning the bank around will succeed, even after the bank reported a worse-than-expected loss on Wednesday and flagged the potential for possible legal hits.
Some stakeholders have already lodged complaints due to the loss of shareholder value in recent years after the bank lurched from one scandal to the next. The lender is expected to settle with those investors for about $200 million, according to analysis by Elliot Stein, a litigation analyst with Bloomberg Intelligence.
Earlier this week, U.S. prosecutors arrested both Archegos founder Bill Hwang and chief financial officer Patrick Halligan, charging them with fraud. The collapse of Archegos exposed gaping holes in how major banks manage their risks, as well as how regulators oversee Wall Street. Credit Suisse was the worst hit by the implosion of the family office.
Credit Suisse shareholders re-elected all board members. They also chose to elect three new members, Mirko Bianchi, Keyu Jin and Amanda Norton.
Axel P. Lehmann was elected as chairman, which now gives him an official mandate from shareholders after he was appointed in January in an emergency replacement of Antonio Horta-Osorio, who was forced to step down for breaching Covid quarantine rules.
The bank, which warned that the full damage from one of the most turbulent periods in its history is yet to be accounted for, is scheduled to host a “deep dive” event for investors on risk, compliance, technology and wealth management in June, before its next earnings release.
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