Credit Suisse shareholders are demanding the removal of the risk head after the twin scandals

Some of Credit Suisse’s largest shareholders will try to remove the risk oversight board member in protest twin scandals which has cost the bank and customers billions and tarnished its reputation.

Andreas Gottschling – a 53-year-old German who has been chairing the risk committee since 2018, earning a $ 1 billion share – has been fired by the Swiss bank after losing at least $ 4.7 billion due to the collapse of the Archegos family office.

That was when Credit Suisse had to suspend funding funds for the $ 10 billion supply chain linked to the controversial Lex Greensill. Its insolvency could cost lenders $ 3 billion to customers. The bank has been forced up $ 1.9 billion to strengthen its capital and suspend payments to investors.

David Herro, vice president of Harris Associates, said he owns 10.25% of the shares, saying: “The director’s job is to represent the shareholders and take care of the management… due to current events “

Herro hoped he would the arrival of a new chair – General Manager of Lloyds Bank António Horta-Osório – would bring 30 April table renewal with more contracted bank specialization.

Harris will be joined by the Ethos Foundation, which represents 200 Swiss pension funds that own between 3 and 5 percent of the lender.

“Our customers are very angry with what has happened,” said Ethos CEO Vincent Kaufmann. “Other members of the risk committee have not been there for a long time, so we will give them more opportunities. [Gottschling] he took office in 2018. That now requires a change. “

Also the Norwegian oil fund he said on Sunday Gottschling would again vote against the election, as well as five other board members, including independent general manager Severin Schwan. The world’s largest sovereign wealth fund accounted for 3.43% of shares at the end of last year, according to the latest outreach.

Credit Suisse and Gottschling refused.

Last week Glass Lewis proxy operating advisor advised shareholders to vote against Gottschlingen. The Greensill and Archegos scandals “questioned the effectiveness of management’s oversight of the company’s risk and control framework.” . . Gottschling has the ultimate responsibility. ”

However, its representative ISS peer did not advise investors to oppose the board member.

Even with Norges ’backing, it’s not clear if Harris and Ethos can gather enough support to disband Gottschling. Last year, Herro he directed the public campaign Silos International Investors and Eminence Capital are backed by Ethos and hedge funds to remove Urs Rohner from the chair and keep former CEO Tidjane Thiam in his role.

He failed. Thiam resigned, the chair was re-elected and he continued until the end of his term. Rohner he said then other major shareholders, including BlackRock, were in favor of it and that investor unrest was not “something that worries me much.”

Gottschling started his own career He has also worked as a quantitative analyst at Deutsche Bank and as a risk manager at McKinsey and Erste Bank. He is also the director of Deutsche Börse.

As a director, Greensille participated in several conference calls on the risks presented last year. FT stories demanded that, in part, SoftBank use funding from Credit Suisse’s supply chain to difficult companies that owned hundreds of millions of dollars.

In the end, Gottschling sided with those who believed Greensill was a valuable entrepreneurial client who deserved to continue with the business, according to people with direct knowledge of the subject.

While SoftBank’s circular funding scheme was halted, Greensill-linked SCF funds totaled $ 10 billion. He was also a supporter of Gottschling Lara Warner, former head of risk and compliance at Credit Suisse who was removed this month.

Another person close to the bank said Gottschling had not been involved in calls about Greensill outside of ordinary risk committee discussions and had not personally “backed down”.

Greensill and Archegos are not the only failures to manage risks during his tenure. In 2018, Credit Suisse lost about $ 60 million after leaving a block of shares in the clothing company Canada Goose when its shares sank. A year later, the bank lost $ 200 million when Malachite Capital’s New York hedge fund failed.

Additional news from Richard Milne