Some of Credit Suisse’s biggest shareholders will try to remove the risk oversight board member in protest against twin scandals which have cost the bank and its customers billions and tarnished its reputation.
Andreas Gottschling – a 53-year-old German who has chaired the risk committee since 2018, earning $ 1 million in annual fees – has been criticized after the Swiss bank lost at least $ 4.7 billion following the collapse of the family office Archegos.
It came shortly after Credit Suisse had to suspend $ 10 billion in supply chain finance funds linked to controversial financier Lex Greensill, whose insolvency could cost clients up to $ 3 billion. of the lender. The bank was forced to raise $ 1.9 billion to consolidate its capital and canceled investor payments.
David Herro, vice president of Harris Associates, who claims to own 10.25% of the shares, said, “It’s the job of the director to represent shareholders and oversee management. . . Not only should Mr Gottschling be dismissed, but I am actually surprised, in light of current events, that he has not already resigned. “
Herro added that he hoped that arrival of a new chair – former general manager of Lloyds Bank António Horta-Osório – April 30 would lead to a redesign of the board with more banking expertise recruited.
Harris will be joined by the Ethos Foundation, which represents 200 Swiss pension funds holding between 3 and 5 percent of the lender.
“Our customers are really angry with what happened,” said Vincent Kaufmann, CEO of Ethos. “The other members of the risk committee haven’t been around for very long, so we’ll give them a better chance. [Gottschling] took over in 2018 as president. This now requires a change. “
The Norwegian oil fund too said sunday he would vote against the re-election of Gottschling, as well as five other members of the board of directors, including the main independent director, Severin Schwan. The world’s largest sovereign wealth fund held 3.43% of the stock at the end of last year, according to its latest disclosure.
Credit Suisse and Gottschling declined to comment.
Last week influential voting adviser Glass Lewis informed shareholders to vote against Gottschling. He said the Greensill and Archegos scandals “cast significant doubt on the effectiveness of the board’s oversight of the company’s risk and control framework. . . Gottschling holds the ultimate responsibility ”.
However, his proxy counterpart ISS did not advise investors to oppose the board member.
Even with Norges’ backing, it’s unclear whether Harris and Ethos can muster enough support to topple Gottschling. Last year, Herro ran a public campaign backed by Ethos and hedge funds Silchester International Investors and Eminence Capital to remove President Urs Rohner and keep former CEO Tidjane Thiam in his role.
He failed. Thiam resigned, the president was re-elected and continued until the end of his term. Rohner said at the time that other major shareholders, including BlackRock, had supported him more and that investor turmoil was “not something that worries me very much.”
Gottschling started his career as a quantitative analyst at Deutsche Bank and also worked for McKinsey and as risk director of Erste Bank. He is also a director of Deutsche Börse.
As a director, he participated in multiple conference calls on the risks presented by Greensill last year. They were in part motivated by stories from FT revealing that SoftBank was using Credit Suisse’s supply chain finance funds to funnel hundreds of millions of dollars to struggling businesses it owned.
In the end, Gottschling sided with those who believed Greensill was a valuable entrepreneurial client worth pursuing business with, according to people with direct knowledge of the matter.
While SoftBank’s circular fundraising program was halted, SCF funds linked to Greensill subsequently grew to $ 10 billion. Gottschling was also a supporter of Lara Warner, former Chief Risk and Compliance Officer of Credit Suisse which was deleted this month.
Another person close to the bank said Gottschling did not participate in calls about Greensill outside of normal risk committee discussions and did not personally “support” him.
Greensill and Archegos weren’t the only risk management failures during his tenure. In 2018, Credit Suisse lost around $ 60 million after it was allowed to hold a block of shares in clothing company Canada Goose when its stock plunged. A year later, the bank lost $ 200 million when New York hedge fund Malachite Capital went bankrupt.
Additional reporting by Richard Milne