Credit Suisse investors target board over Archegos, Greensill failures

Norway’s sovereign fund says it will vote against bank’s director appointments after back-to-back blows.

Credit Suisse is dealing with fallout from the collapse of clients Archegos and Greensill. Picture: AFP

Top shareholders said they would vote against re-electing key Credit Suisse Group AG board members, a broadside against the bank’s leadership following a $US5.5 billion loss from hedge-fund Archegos Capital Management.

At the bank’s annual meeting this Friday, Norges Bank Investment Management said it would vote against the reappointment of Andreas Gottschling, chairman of the bank’s risk committee. Mr. Gottschling joined the board in 2017 from the top risk job at Austria’s Erste Group Bank AG.

As head of the risk committee, he was charged with overseeing Credit Suisse’s overall risk appetite and controls. In addition to the Archegos loss, Credit Suisse is dealing with fallout from the collapse of another client, U.K. finance firm Greensill Capital, with which it ran $US10 billion in investment funds.

Norges, an arm of Norway’s central bank that runs its sovereign oil fund, owns around 3% of Credit Suisse. It said it would also oppose re-electing the lead independent director Severin Schwan, who is chief executive at Roche Holding AG, and Richard Meddings, a veteran British banker who joined the board last year and is overseeing investigations into Archegos and Greensill.

Switzerland’s Ethos Foundation said it too would vote against Mr. Gottschling’s reappointment. The group, representing Swiss pension funds, has criticised the bank and its longtime chairman, Urs Rohner, for years. Last year, he received a 77.5% vote for re-election, while all the other directors got at least 90% favourable votes.

Mr. Rohner isn’t up for re-election. He will retire Friday from the bank after a 17-year career. In his place, investors will vote on the appointment of Portuguese native António Horta-Osório as the new chairman. The departing chief executive of Lloyds Banking Group PLC overhauled the U.K. domestic banking giant in 10 years there and simplified its business.

Mr. Horta-Osório is expected to oversee further changes in strategy and to the executive team and board when he takes the chairman role at Credit Suisse. Two more new directors are to join after Friday’s vote: Blythe Masters, a former JPMorgan Chase & Co. executive, and Clare Brady, a banking auditor who worked at the International Monetary Fund, the Bank of England and Deutsche Bank AG.

Ethos Foundation said earlier this month that it hopes the arrival of Mr. Horta-Osório will allow the establishment of “a new corporate culture with a more focused approach on risk management.” A Credit Suisse spokesman declined to comment on the shareholder vote. Earlier in April, shareholder adviser Glass Lewis recommended clients oppose Mr. Gottschling, saying he holds ultimate accountability at the board level for the recent risk failings. It said changing the risk committee leadership could help rebuild shareholder trust.

Glass Lewis ran through a list of recent transgressions at the bank that present additional legal, reputational or regulatory risks, including a spying scandal in 2019 that led to executives leaving, and Credit Suisse’s efforts to block the publication of a regulatory report on its yearslong failings in stopping a banker stealing from clients.

Archegos, a family investment vehicle for Bill Hwang, failed in late March and Credit Suisse and some of its other lending banks had to sell large stock positions at losses. Credit Suisse lent more to Archegos 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 top executives and last week said it is under Swiss regulatory enforcement proceedings for possible risk management shortcomings over Archegos. It also raised fresh capital from investors late last week to shore up its balance sheet in response to the losses.

The Wall Street Journal