Contents
At the first general meeting of the new UBS, a number of issues are likely to be on the minds of shareholders.
How much salary is appropriate for bank boss Sergio Ermotti? How is the integration of Credit Suisse progressing? And how much capital should UBS set aside for future crises? These are hot topics that will be discussed at the first general meeting of the new, even larger UBS.
Is 14 million francs in wages okay for Sergio Ermotti?
Finance Minister Karin Keller-Sutter expressed her doubts when she recently presented the Federal Council’s report on banking stability. Executive compensation would be beyond the imagination of any ordinary citizen. “I don’t think this development is good,” said the FDP Federal Councilor.
FDP party president Thierry Burkart spoke of “presumptuous bonus excesses” by some top managers. These would destroy the population’s trust in the economy as a whole. There was also a lot of criticism elsewhere. SP co-president Cédric Wermuth, for example, said: Sergio Ermotti’s salary of a good 14 million francs was “beyond good and evil”.
However, politicians do not decide on the level of manager salaries. The general meeting decides on this. There should be a yes to the remuneration. Because most of the investors who call the shots at UBS are hardly bothered by lavish top salaries. They want to see growth and increasing profits.
Shareholder representatives recommend rejection of the remuneration report
Open box Close box
At the UBS general meeting, Ermotti’s salary will also be a topic of discussion among shareholders. Although the bank’s CEO is working “according to all previous knowledge” successfully, his remuneration is “massively exaggerated”, criticizes the shareholders’ association Journalists. Ermotti’s salary of a good 14 million francs goes beyond “the usual framework,” writes Actares in a statement and recommends that shareholders reject all compensation agendas.
The organization is also dissatisfied with UBS’s sustainability efforts. For example, there is no obligation to phase out fossil fuels. The approval of the sustainability report should also be rejected. Because of the importance of the climate issue, the organization also recommends rejecting the management report and opposes the discharge of the board of directors and management.
The shareholder representative shows somewhat less rejection Ethos. With nine out of 29 items on the agenda, he rejected around a third of the applications. Ethos is also against the acceptance of the compensation and sustainability reports. The two important shareholder organizations see it differently ISS and Glass Lewis. Both recommend that shareholders accept all items on the agenda at the AGM, including the remuneration of the management and board of directors as well as the sustainability report. (srf/awp)
How is the CS takeover going?
The bank management will say little new about this at the AGM. Because the most important points are known. But they certainly provide fuel for discussions: the Swiss branch network is expected to shrink to around 200 branches. To date there have been around 190 UBS branches and an additional 95 CS branches in Switzerland. The number of branches of both banks combined will now be drastically reduced – by around a third.
From the perspective of shareholders, this is good news. Because running branches costs money. The fewer branches, the more profit remains. For the same reason, the planned workforce reductions are likely to meet with – majority – approval. The bank wants to cut 3,000 jobs in Switzerland alone.
Before it can fully implement this, the bank wants to merge the legal entities of UBS and CS. That should happen by summer. This is likely to be followed by further cost cuts. The aim of the general meeting is primarily to provide information about the status of the company’s restructuring.
How much capital will UBS need in the future?
UBS will need massively more capital in the future than it does today. The Federal Council recently made this clear in its banking stability report. When asked, Finance Minister Karin Keller-Sutter confirmed: An additional requirement in the range of 15 to 25 billion dollars is realistic. These figures were calculated by financial analysts based on the Federal Council’s proposals for banking regulation.
One principle of this regulation is: UBS must have so much capital that it can weather stormy times with as much stability as possible. Otherwise the bank is too great a danger for the entire economy and therefore for Switzerland.
What is crucial is that if UBS collapses one day, taxpayers must not be asked to pay. At the AGM, UBS will explain how it basically intends to raise the necessary capital without reacting directly to the bank stability report. She wants to examine this more closely first.