Advice targets Credit Suisse investors over Archegos and Greensill failures
Major shareholders say they will vote against re-election of major Credit Suisse Group AG
board members, a setback against the bank’s leadership following a $ 5.5 billion loss to hedge fund Archegos Capital Management.
At the bank’s annual meeting on Friday, Harris Associates and Norges Bank Investment Management said they would vote against the reappointment of Andreas Gottschling, chairman of the bank’s risk committee. Mr. Gottschling joined the Board of Directors in 2017 after holding the high risk position at Erste Group Bank AG in Austria.
David Herro, a partner at Harris Associates with an approximate 8% stake in Credit Suisse, said he would vote against Gottschling because he was the director in charge of risk.
Norges, a branch of the Norwegian central bank that manages its sovereign oil fund, owns around 3% of Credit Suisse. He said he would also oppose the re-election of independent lead director Severin Schwan, who is CEO of Roche Holding. AG
, and Richard Meddings, a seasoned British banker who joined the board last year and oversees investigations into Archegos and Greensill.
According to Swiss rules, more than half of the shares with voting rights must go against a director to block re-election.
Switzerland’s Ethos Foundation has said it will also vote against the reappointment of Mr. Gottschling. The group, representing Swiss pension funds, has criticized the bank and its long-time chairman, Urs Rohner, for years. Last year, he received a 77.5% vote for re-election, while all other directors received at least 90% of votes in favor.
Mr Rohner is not re-elected. He will retire from the bank on Friday after a 17-year career. In his place, investors will vote on the nomination of Portuguese António Horta-Osório as the new president. The outgoing CEO of Lloyds Banking Group PLC overhauled the UK national banking giant in 10 years and streamlined its operations.
Mr. Horta-Osório is expected to oversee subsequent changes in strategy as well as the management team and the board of directors when he assumes the role of Chairman of Credit Suisse. Two new directors are due to join after Friday’s vote: Blythe Masters, a former executive at JPMorgan Chase & Co., and Clare Brady, a banking auditor who has worked at the International Monetary Fund, Bank of England and Deutsche Bank. AG
The Ethos Foundation said earlier this month that it hopes that the arrival of Mr. Horta-Osório will allow the establishment of a “new corporate culture with a more focused approach to risk management” .
A spokesperson for Credit Suisse declined to comment on the shareholder vote.
Earlier in April, shareholder adviser Glass Lewis recommended clients oppose Mr Gottschling, saying he holds ultimate board-level responsibility for recent risk lapses. He said changing the direction of the risk committee could help restore shareholder confidence.
Glass Lewis has gone through a list of recent breaches at the bank that pose additional legal, reputational, or regulatory risks, including a spy scandal in 2019 that led to the departure of executives and Credit Suisse’s efforts to block publication. a regulatory report on its long-standing failures. by preventing a banker from stealing customers.
Archegos, a family investment vehicle for Bill Hwang, failed at the end of March and Credit Suisse and some of its other lending banks had to sell large stock positions at a loss. Credit Suisse has lent Archegos more relative to its size than other lending banks and was one of the last to exit, the Wall Street Journal previously reported.
In response, Credit Suisse cut its dividend, ousted senior executives and said last week it was under Swiss enforcement proceedings for possible risk management loopholes. regarding Archegos. It also raised fresh capital from investors late last week to consolidate its balance sheet in response to the losses.
Write to Margot Patrick at [email protected]
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