2023-08-14 16:03:41
After the takeover of Credit Suisse (CS), UBS is gripped by a wave of lawsuits. Former CS shareholders consider the price of CHF 3 billion that UBS paid for Credit Suisse in the form of treasury shares to be far too low. Led by lawyers from investor protection associations and legal service providers, they are taking legal action against the exchange ratio published by UBS on March 19. Accordingly, Credit Suisse shareholders received one UBS share certificate for 22.48 CS shares. Measured against the UBS closing price on March 17, this results in a price of CHF 0.76 per CS share. Two days earlier, the CS stock exchange rate was CHF 1.86; the book value per CS share was CHF 13.70 at the end of March, according to the Swiss Investor Protection Association (SASV), behind which more than 1000 investors have gathered according to their own statements.
“We filed a model lawsuit with the Zurich Commercial Court on Monday,” said SASV Secretary General Arik Röschke in an interview with the FAZ. The plaintiffs rely on Article 105 of the Swiss Merger Act. According to this, shareholders can demand “control of the exchange ratio” and “appropriate compensation” for their share certificates as a result of a business combination. This involves compensation in cash and not in the form of additional shares.
When asked, UBS declined to comment on the lawsuits. In court, their lawyers will probably argue that CS would have gone bankrupt had it not been for the UBS takeover. Consequently, the CS shareholders would have suffered a total loss. Philippe Grivat, lawyer and co-founder of the Lausanne-based legal service provider Legalpass, does not believe that this argument can be proven. And if it were, it would be irrelevant from his point of view. The decisive factor is that the market and book value of CS at the time the merger was announced was much higher than the agreed purchase price, Grivat told the FAZ. Legalpass also filed a model lawsuit against UBS through a Zurich lawyer on Monday. According to Legalpass, more than 3,000 CS shareholders were mobilized within two months. The shareholder protectors of the Swiss Ethos Foundation also support this initiative.
Also CS employees among the plaintiffs
According to Röschke, the majority of the investors who have joined the lawsuit initiated by the SASV against UBS are small Swiss shareholders. Among them are many (also former) employees of Credit Suisse, which has been under the umbrella of UBS since the beginning of June. “The bad exchange ratio and the previous drop in price is a huge issue for the CS people. Some lose two years’ salary as a result,” said Röschke, referring to the large blocks of shares that the fallen Credit Suisse once granted its employees through comprehensive bonus programs. However, for fear of reprisals from UBS, the complaining employees wanted to remain anonymous. “Nobody wants to talk about it publicly.”
The purchase price for Credit Suisse was set in a rush action without a well-founded basis for decision-making and evaluation, said Röschke. He spoke of a horse trade. The shareholders’ protectors want to use the lawsuit to force a judicial review of the exchange ratio. To do this, the court would have to commission an independent valuation report. Röschke estimates that it could take a year and a half before a verdict is reached. If this fails to the detriment of UBS and the bank then appeals, the proceedings can continue for years up to the last instance, the Federal Supreme Court.
Johannes Ritter and Jannik Belser Published/Updated: , Recommendations: 91 Johannes Ritter Published/Updated: , Recommendations: 1 Published/Updated: Recommendations: 18
However, the SASV and Legalpass are open to an early out-of-court settlement. Röschke sees this as an advantage for UBS: “Should the bank be forced to pay higher compensation in a final judgment, it would be very expensive because all CS old shareholders would automatically benefit from it.” However, the result of an out-of-court settlement would only come to benefit plaintiffs.
The emergency decree of the Swiss Financial Market Supervisory Authority (Finma) to completely delete the so-called AT1 bonds of Credit Suisse worth 16 billion francs also has legal consequences. On the other hand, the Federal Administrative Court in St. Gallen received more than 320 complaints on behalf of around 3,000 people affected.
#Credit #Suisse #shareholders #UBS #court