Credit Suisse Shareholders Advised Against Clearing Board of 2020 Liability

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Proxy advisers Glass Lewis and ISS have recommended Credit Suisse’s shareholders vote against discharging the bank’s board and management from liability for the 2020 financial year at its annual general meeting on April 29.

Glass Lewis said in a report on Monday that shareholders “could reasonably hold the board and executives accountable for the identified deficiencies in the company’s risk and control framework that were in place during fiscal year 2020.”

ISS noted in a report on Tuesday that the same issues had entailed “entailed substantial monetary and reputational costs for the company, and by extension its shareholders.”

Shareholders are set to scrutinize the performance of Switzerland’s second-largest bank during 2020 and 2021, when a series of scandals prompted ousters, investigations and losses.

Credit Suisse’s board will leave managers potentially liable for its Greensill-linked funds’ collapse when it asks investors to grant them a discharge for other activities.

The bank racked up a 1.6 billion Swiss franc ($1.7 billion) 2021 loss, partly as a result of a $5.5 billion hit from the implosion of investment fund Archegos.

It was also hit by the collapse of $10 billion in supply chain finance funds linked to insolvent British financier Greensill for which it is still trying to recover funds.

Votes at this year’s AGM will cover two financial years as Credit Suisse withdrew an agenda item from its meeting in 2021 while it investigated the Greensill and Archegos matters.

Both ISS and Glass Lewis recommended shareholders vote in favor of discharging Credit Suisse directors from liability for the 2021 financial year.

While the bank still had “a long way to go to effect a convincing turnaround and materially reduce its exposure to reputational and litigation risk,” it had taken meaningful steps to improve its culture and risk governance, Glass Lewis said.

ISS said a “qualified vote” in favor of management’s performance for 2021 was warranted due to “significant levels of personnel refreshment and remedial measures implemented.”

“Nevertheless, some concern is still raised for 2021 considering the actions of the former board chair during the year,” it added.

Credit Suisse said it took note of the recommendations, adding that Glass Lewis and ISS had recommended shareholders support the board’s positions on all but one proposal.

Shareholder groups have submitted two proposals running counter to the board of directors, asking investors to approve a special audit examining the bank’s actions, and separately to strengthen its climate change strategy.

Glass Lewis and ISS recommended shareholders reject both.

(Reporting by Brenna Hughes Neghaiwi; editing by Michael Shields and Alexander Smith)

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