Two general meetings for nothing, or in any case for not much, took place in Switzerland on April 4 and 5: that of Credit Suisse then that of UBS, the two largest banks in the country. These meetings were an opportunity for the leaders of the two establishments to apologize or try to reassure, while the shareholders were able to express their doubts and anger.
On the other hand, there is no question of voting on the most strategic subject, that of the merger of the two establishments, decided urgently on March 19. The shareholders have indeed been dispossessed of this right, by decision of the authorities.
An operation decided in a weekend
The operation, we remember, was decided in a weekend. UBS bought its rival for 3 billion Swiss francs, while Credit Suisse was the victim of a flight from its customers and risked bankruptcy. The government was directly in charge. He put the bankers around a table and offered guarantees.
It assumed all losses that the new institution might incur, up to 9 billion Swiss francs. He also used a clause in the Swiss Constitution which allowed him to authorize the combination without the shareholders having a say, nor the competition authorities.
The new establishment will employ 120,000 people
“Political hazard prevailed over moral hazardcomments a Parisian banker. Action had to be taken to avoid a major financial crisis. But after that, we see that having the word “Swiss” in your name does not protect against bankruptcy”, he adds with a touch of irony.
The merger gives birth to a banking giant. The new establishment will employ 120,000 people worldwide, including 37,000 in Switzerland, and will end up managing the equivalent of 5,000 billion euros in assets. This rapprochement looks like “a herculean task”, in the words of Urban Angehrn, the director of Finma, the policeman of the financial markets in Switzerland. According to him, the operation will take ” several years “.
Many layoffs
It will result in many layoffs, which could affect between 20 to 30% of the workforce. And at first, the leaders of the two banks must face the nervousness of the shareholders.
Tuesday, April 4, it was those of Credit Suisse who were gathered for a last AG. For five hours, small porters let their anger explode. “The action is barely worth the price of a candy”, launched one of them. Outside, environmental organizations erected a boat hull depicting the sinking bank.
Apologies from the Chairman of Credit Suisse
In front of them, the president of Credit Suisse, Axel Lehmann, apologized at length. “I can understand the bitterness, anger and shock of everyone who is disappointed, overwhelmed and affected” by what happened, he said. “We wanted to put all our energy and effort into turning the situation around. It hurts me that we didn’t have time to do this and in that fateful week in March our plans were thwarted. And for that, I am deeply sorry,” he added.
On April 5, it was the turn of the shareholders of UBS to meet and on their side, it was the concern that dominated. “We buy a bank without know what’s in the cupboards, noted, for example, Vincent Kaufmann, director of the Ethos foundation, which represents pension funds in Switzerland.
Credit Suisse victim of its risk appetite
The two former rivals indeed inherit very different cultures. UBS has now become a prudently managed establishment, which generated profits of more than 7 billion Swiss francs (7.079 billion euros) last year. Credit Suisse, on the contrary, has been a victim of its excessive appetite for risk. And he lost exactly the same amount last year.
To lead the merger of the two banks, the UBS board of directors decided to recall the bank’s management to Sergio Ermotti, who was already in this position from 2011 to 2020. At the time, he successfully led difficult restructuring. He will have to repeat the exploit and clean up the accounts of Credit Suisse.