On March 19, under intense pressure from the Swiss authorities, the country's largest bank agreed to buy its rival for 3 billion Swiss francs - a pittance - and with solid financial guarantees from the central bank to the government.

But it is not certain that the shareholders who will meet in Basel in northwestern Switzerland for the general meeting of their bank, will be satisfied.

While UBS is in good financial health, it has agreed to merge with a bank plagued by repeated scandals, exposing an unbridled risk culture.

In 2022, UBS earned a net profit of CHF 7.6 billion (about the same amount in euros) while Credit Suisse lost CHF 7.3 billion.

After a stormy Annual General Meeting of Credit Suisse on Tuesday, UBS shareholders will be able to freely express their questions, frustrations and even their anger for long hours.

Credit Suisse shareholders discuss at the bank's latest annual general meeting, April 4, 2023 © Fabrice COFFRINI / AFP

Like Credit Suisse's securityholders, they were prevented from commenting on the proposed buyback.

The Swiss authorities decided that the interest of the financial centre was in the balance and simply suspended the right of shareholders to vote on the takeover.

High-risk operation

UBS, which will metamorphose into a banking colossus at the head of 5,000 billion in assets invested once this merger is finalized, is launching with force in a "complex" operation, as its chairman, Colm Kelleher, himself acknowledged.

The Swiss banking giant has itself had its share of turbulent general meetings in the past, especially in the years following the financial crisis that required the implementation of a rescue plan by the state.

A past gone after the major restructuring led by Sergio Ermotti, its boss from 2011 to 2020. The next stage of strategic growth had to focus on digital.

But faced with the magnitude of the task, the Dutchman Ralph Hamers was asked to give up the position of managing director he had just occupied, to bring back Mr. Ermotti, the George Clooney of Zurich finance.

Credit Suisse © share price Jean-Michel CORNU / AFP

He will take over the management of the bank at the end of this general meeting.

"The new bank will have to put an end to the culture of irresponsible risk that has been going on for years at Credit Suisse," shareholder organization Actares said in a statement on the eve of the AGM.

Given the duplications, the cuts that the bank will have to implement will also lead to "significant job cuts", added the shareholder organization, which requires the bank's management to carry out "under socially acceptable conditions".

Together, the two banks employ 120,000 people worldwide, including 37,000 in Switzerland. Job cuts could represent 20 to 30% of the workforce.

Risks of litigation

The combination of Credit Suisse poses numerous implementation risks in addition to the numerous disputes accumulated by the bank that UBS will have to settle.

As soon as the takeover was announced under duress, a lawyer from Basel launched a platform to help small shareholders of Credit Suisse defend themselves.

Credit Suisse bondholders, who saw 16 billion Swiss francs go up in smoke with a wave of the Swiss financial market watchdog, are also preparing legal actions.

On Tuesday, Vincent Kaufmann, the director of the Ethos Foundation, also noted that behind the scenes of the Credit Suisse general meeting, shareholders were "trying to meet to prepare something".

Credit Suisse Chairman at the bank's last Annual General Meeting on April 4, 2023 © Fabrice COFFRINI / AFP

"There are bases that are being created to potentially go before the judge to ask for a review of the exchange ratio of UBS's offer," he told AFP.

Like Actares, the foundation, which represents pension funds in Switzerland, has also called for a vote against UBS's remuneration report.

For 2022, Ralph Hamers was awarded a bonus of CHF 9.7 million, bringing his total remuneration to CHF 12.6 million.

© 2023 AFP