Credit Suisse Group AG (CSGN)’s top officials told investors that Switzerland’s second-biggest bank is pushing to resolve the U.S. probe into whether it helped American clients evade taxes.
“The resolution of the tax dispute is one of the most pressing issues currently facing Credit Suisse,” Chairman Urs Rohner said at the annual shareholder meeting in Zurich today. “We are doing everything we can to resolve this matter within the given framework of U.S. and Swiss law in the best possible way and in a timely manner.”
The U.S., which has been investigating Credit Suisse for more than three years, is pressing for a guilty plea from the parent company, a person familiar with the negotiations said this week. Such an action against Credit Suisse could alarm customers and other firms that do business with it, lawyers have said. The bank may also face a penalty of as much as $1.6 billion, another person familiar with the matter said.
“We do not dispute that some foreign clients, including U.S. clients, used Swiss banking confidentiality in order to deposit undeclared assets in Switzerland,” said Rohner, 54. “To the extent that errors were made by the bank, it has to assume responsibility.”
Rohner said the Department of Justice investigations are continuing and that he cannot comment on the details.
Chief Executive Officer Brady Dougan told shareholders the bank is working “hard” toward a resolution, though the outcome and timing remain uncertain.
“The sooner we can get to a resolution and eliminate the uncertainty on this, the better,” said Dougan, 54. “At this time, we are focused on achieving a manageable outcome and putting this issue behind us.”
Shareholders backed the firm’s compensation report in a non-binding vote today, with about 81 percent support, though some investors criticized rising pay at the company. Investors also approved a change in Credit Suisse’s articles of association to allow binding votes on compensation in the future, in line with changes is Swiss law.
“It is shocking that management compensation has been increasing ever more for two consecutive years,” said Dominique Biedermann, the CEO of Ethos, a foundation that advises institutional investors on governance.
Credit Suisse raised Dougan’s pay by 26 percent last year after the bank missed targets it set for profitability and costs as a proportion of income for the year.
“Total compensation has been reduced massively over the past years,” Rohner said, responding to shareholder criticism. “I know that in our industry compensation to some extent remains very high.”
Ethos counsels institutions that collectively control 3 percent of Credit Suisse’s capital, and is the biggest shareholder adviser in Switzerland, Biedermann said.
Shareholders narrowly approved Credit Suisse’s proposal to increase conditional capital that could be used to issue new shares as part of employee compensation. The proposal got 67.7 percent support, and needed at least 66.7 percent to pass.
To contact the editors responsible for this story: Frank Connelly at firstname.lastname@example.org Steve Bailey