Credit Suisse's Thiam Seeks to Reassure Shareholders at AGM

  • CEO insists his plan, while painful, is only path to success
  • Thiam was speaking at first annual meeting with shareholders

Chief Executive Officer Tidjane Thiam sought to convince shareholders that his strategy for turning around Credit Suisse Group AG will succeed while acknowledging the plan is still very much a work in progress.

“We are building our platform for the future,” Thiam told shareholders in Zurich on Friday. “That can seem like a tough task, and one that rarely wins many plaudits in the short term, but it is the only path that will lead to success in the long term.”

Thiam, 53, is under pressure from investors in Switzerland’s second-largest lender. The stock has declined more than 42 percent since he joined Credit Suisse from British insurer Prudential Plc in July. The CEO announced deeper cuts to the securities unit in March, just five months after setting out plans to shrink that business and focus on wealth management.

‘Disciplined, focused’

Making his first appearance at the annual general meeting, Thiam said restructuring efforts will continue to affect the bank’s performance this year.

“It is therefore more important than ever for us to remain disciplined and focused on Credit Suisse’s priorities going forward,” he said. “Our aim is to be capital generative and to deliver profitable growth through the economic cycle.”

Shareholders approved 35 million Swiss francs ($36 million) in bonuses for executives in 2015, ignoring recommendations from advisory groups including Glass Lewis to reject the pay packages in light of the weak performance.

Credit Suisse reported a bigger-than-expected loss in the fourth quarter and the CEO said last month that writedowns on trading positions are threatening profit again in the first quarter. The bank is scheduled to release earnings on May 10.

“It cannot and must not be that bonuses are paid out after such a desolate business year,” said Thomas Minder, a Swiss lawmaker identified with a law giving shareholders rather than company boards final say on executive pay. He was among several shareholders who lashed out at the board over compensation policy.

Urs Rohner, chairman since 2011, was re-elected with support from 92 percent of voters, albeit with a slight delay. As the vote was about the begin, a shareholder jumped on the podium, exhorting shareholders to educate themselves on “how the system really works.”

“Don’t boo me,” Martin Heinrich said when the audience protested. “If you believe that this bank will remain standing for long, you are stupid.” He continued to lecture them for a few minutes until the bank called security, at which point he quietly stepped down.

Shareholders also elected two new members to the board, Joaquin Ribeiro and Alexander Gut, son of former Chairman Rainer Gut.

The last time Thiam faced shareholders was in November, when he asked them to approve a capital increase of about 6 billion francs to fund the bank’s restructuring. Since then, market turmoil has complicated his plan.

Thiam asserted in March that he was unaware of illiquid trading positions that have led to almost $1 billion in losses over the last two quarters. Asked whether shareholders can expect “personal consequences” from the losses, Rohner said the bank’s risk committee “works in a very professional manner and very hard.”

“The fact that there can be losses in the credit business when the cycle changes, is part of the business,” he said.

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