UBS-CS takeover
It will be over on June 12: This is how Walter Kielholz sees the end of “his” Credit Suisse – from Blocher to the CEOs to “FDP-Filz”
UBS officially takes over CS on June 12th. In fact, Credit Suisse is already history. Walter Kielholz is now commenting on the end of “his” bank. For the longtime ex-president it is clear how the second largest bank in Switzerland could have collapsed. He is surprisingly critical of the future of UBS-CS.
“Mister CS” Walter B. Kielholz (right) speaks for the first time about “his” bank. Also in the archive photo: Sergio Ermotti, former and renewed UBS boss and in between Kielholz’s successor at Swiss Re.
Image: Sandra Ardizzone
He was President of Credit Suisse for many years and a member of the Board of Directors of the major Swiss bank for much longer. While all the CEOs came and went, Walter Kielholz simply remained “Mister CS”.
But then the number 2 had to be taken over by UBS in an emergency in the spring – the number 1 in the local banking center. CS was no longer able to survive on its own and had lost the trust of its customers. Of course, many questions came up again with “Mister CS”. how could it get so far?
Now Walter Kielholz speaks for the first time – about the emergency takeover and how it came about. On Whit Monday he gave his first interview to the Tamedia newspapers – which was then printed on Monday. Here are the most important statements of the former “Mister CS”:
How did Credit Suisse go under?
The former president sees two points for the decline of Credit Suisse, as Kielholz says: On the one hand, the departure of António Horta-Osório after his violation of the corona quarantine regulations in 2022. The Portuguese-British CEO was “an excellent operational bank boss”. But “I found the spectacle that the bank offered there simply embarrassing in terms of reputation,” says Kielholz.
And on the other hand, a rescue plan was presented by the top Credit Suisse last fall “that was never properly implemented”.
At the beginning of the year, the bank had no chance in a “perfect storm” as a result of “operational errors of a grosser nature”, rising interest rates and the collapse of two US banks. Walter Kielholz: “It was over then.”
Who is to blame for the collapse of the second largest bank in Switzerland?
On the fact that the bank had already had to accept billions in write-offs in previous years (and also since last autumn) due to poor management decisions, says Walter Kielholz: “Of course it should never have happened like this.”
In retrospect, the former president also severely criticizes the culture of the bank and management in dealing with their own mistakes: “They then replaced the relevant people. And yet you couldn’t get out of it.”
What did the competition do better?
The continuity in the staff of the large banks in the USA, which CS had always taken as a model, is much greater. Their top people are each “ten years and more at the wheel,” says Kielholz. “This stability is extremely important.”
What does the “FDP felt” have to do with the downfall?
Since the emergency takeover, there has also been a political search for culprits in Switzerland. On the evening of the UBS-CS deal, the SVP criticized the alleged “FDP-felt” at Credit Suisse.
And later doubled the old Federal Councilor and SVP doyen Christoph Blocher. Accordingly, “the misery of CS” began much earlier, namely “in the 90s. Actually under Rainer E. Gut and his successor Kielholz». According to Blocher, they were appointed by CEOs Brady Dougan and Tidjane Thiam together with Urs Rohner. It was these two bank bosses who “driven CS to its demise over the last fifteen years. It’s just the old FDP stuff, »says Blocher.
Former SVP Federal Councilor Christoph Blocher and longtime CS critic.
Bild: Keystone
“Mr. Blocher and I were never great friends,” says Walter Kielholz. As a liberal, he was repeatedly committed to his party and in particular to the Zurich section, which had long been discredited nationally as a «Zurich economic liberal». In addition, the ex-CS President is considered an advocate of EEA accession – and was one of Blocher’s opponents during his political rise.
“When I heard that, I was looking for this ominous FDP felt, it probably needs at least three people. I haven’t found a single FDPler in a crucial CS post. Who should it have been?”
Moreover, Rainer E. Gut is a CVPler, adds Walter Kielholz. And Urs Rohner was “a well-known lawyer and Pro-Sieben boss” when he brought him to CS with Oswald Grübel.
So who is really to blame for the CS downfall?
Urs Rohner: 2011 to 2021 President of Credit Suisse
Bild: Keystone
In general, the name Urs Rohner. In the public perception, he has recently been regarded as the main culprit in the CS mess, in which the bank ultimately went under. Walter Kielholz simply calls this a “steep thesis”:
“The board of directors of the bank has proposed him for re-election every year. And the shareholders have re-elected him every year. A lot of people obviously disagreed.”
The personnel decision for Rohner was already 14 years ago, according to Walter Kielholz. But: “I can still justify my support from that point of view today.”
When the bank really got into trouble, official Switzerland was also to blame for the failure. Walter Kielholz: “The National Bank and the regulator, i.e. the financial market supervisory authority, hesitated too long in the autumn to ensure CS’s liquidity,” criticized the former, long-standing president of Switzerland’s second largest bank.
Out of concern about the global impact of such a major bank failure, the Federal Council, the Swiss National Bank (SNB) and the Financial Market Authority (Finma) mediated the emergency takeover of CS by competitor UBS in March. In total, they secured this with 259 billion Swiss francs. Credit Suisse has repaid the direct federal guarantee of 100 billion since Thursday. No status information is known yet for securing the SNB, also in the amount of 100 billion.
Does Walter Kielholz also see his own mistakes?
When asked several times, Walter Kielholz says that of course he also sees mistakes in himself. Even if not decisive, which have now led to the downfall of CS. “Our mistake was that we didn’t set a limit for the bonuses.”
However, they “simply didn’t expect (…) that we could be so much better than the others” and Brady Dougan had to pay a bonus of around 70 million in the end. In retrospect, Kielholz goes one step further: “You should have simply said: We won’t pay for that.” Today he thinks Dougan would have accepted that. “Unfortunately, we didn’t take advantage of this opportunity.”
What is Kielholz’ relationship with CS today?
“I haven’t had any confidential information since I left the Board of Directors in 2014,” says Walter Kielholz. And since he left, he has “no longer played a role” at the bank – although his name is still mentioned inseparably with that of the bank.
And so on Sunday, March 19, 2023, he and his wife had to sit in front of the television to find out what was happening to “his” big bank. Namely the forced sale to the competitor UBS by the federal government, the National Bank and the banking supervisory authority.
And the former “Mister CS” goes on to say about this historic TV evening:
“Then I lost the ground under my feet for a moment.”
After serving on the board of directors at CS (1991 to 2014, including chairman from 2003 to 2009), Walter Kielholz moved to reinsurer Swiss Re as chairman. The 72-year-old chaired its board of directors from 2009 to 2021 and was then appointed honorary president.
Incidentally, Sergio Ermotti was chosen as Kielholz’s successor at Swiss Re at the time – the former, long-standing head of UBS from Ticino. In the meantime, he has returned to the banking business as the new CEO of the merged UBS-Credit-Suisse.
How does the former Credit Suisse President see the merged UBS-CS?
Finally, Kielholz is also asked about his view of the merged new UBS major bank. Basically, he sees this positively – “Switzerland can do that,” he always hears from abroad. But one must “assume” that “mistakes will continue to happen in the future, or that there are situations in which the bank comes under pressure without being able to do anything about it”. Total absolution sounds different.
And promptly in the interview follows a prominent and surprising “but” from the former “Mister CS”: “But I’m not so sure myself. Because in the event of a crisis, what is needed above all is political will,” says Walter Kielholz. And as is well known, this political pressure – to put it positively – saved CS on March 19th. Or to put it negatively: driven into the hands of competitor UBS.
June 12, 2023: The date for the definitive end of the CS is now known
UBS will take over Credit Suisse in a week – then the shares will also be taken off the stock exchange
The date is now set: the emergency purchase of Credit Suisse by UBS is to be completed in a week. The world‘s most significant takeover of a major bank since the 2008 financial crisis is about to be completed.
As Credit Suisse wrote in a statement on Monday, trading in its shares is also to be discontinued on this date. As is well known, the takeover deal will be completed with a share exchange offer to the CS shareholders. They receive UBS shares for their previous papers.
As CS writes, the final takeover is still subject to the US Securities and Exchange Commission agreeing to the registration of the shares in the merged bank. UBS itself must also consider the other closing conditions to be met or refrain from complying with them.
The Swiss stock exchange also announced on the same day that Credit Suisse shares would last be traded on the SIX on June 12. After that, the registered shares of Credit Suisse Group AG with a nominal value of CHF 0.04 are to be delisted. As CS writes, its shares are also to be taken off the New York Stock Exchange. (sat/dpa)