Ethos opposes the conditional capital (Credit Suisse) and the remuneration report (UBS and Credit Suisse)

Ethos opposes the pursuit in the investment bank's trading activities as they are not in the long term interest of the shareholders. Despite the amendments introduced since last year, Ethos also opposes the remuneration reports of UBS and Credit Suisse. Ethos considers that the variable remuneration remains high and is not capped.

At Credit Suisse, Ethos opposes the creation of a pool of conditional capital without pre-emptive rights corresponding to 42% of the issued capital. This conditional capital will be used to cover the Contingent Convertible Bonds (CoCos) that will be issued to reinforce its core equity base. Two thirds of the shareholder equity corresponding to about CHF 20 billion is currently used to back Credit Suisse's investment bank's trading activities. Dominique Biedermann, Ethos' executive director says “Ethos opposes the pursuit of the trading activities in the investment bank. These activities are very capital intensive and carry risks that are not in line with the long term interests of Credit Suisse's shareholders. Without these activities, the issuance of CoCos is not necessary”.

Ethos opposes the pursuit of the trading activities in the investment bank of Credit Suisse for the following reasons:

• Trading in the investment bank requires too much equity compared to the equity required for the traditional activities of the bank.
• The investment bank's trading results are very volatile and not necessarily profitable in the long run. According to Ethos' calculations, the cumulative economic loss (taking into account the cost of capital) is estimated at approximately CHF 7 billion in the last seven years.
• The remuneration of the 20'000 employees of the investment bank is excessive, corresponding to CHF 388'000 on average per employee per annum.
• The important risks taken by the investment bank can endanger the stability and the reputation of the bank.

Moreover, the requested conditional capital carries no pre-emptive rights. 60% of the conditional capital will be exclusively reserved for the CoCos issued to the two largest investors of Credit Suisse (Olayan Group of Saudi Arabia and the Qatar Investment Authority) at particularly favourable conditions, with a 9% and 9.5% interest rate for perpetual CoCos.

To reinforce the bank's core equity and avoid issuing CoCos, Ethos opposes the payment of the dividend of CHF 1.5 billion.

UBS and Credit Suisse: Excessive Remuneration

Ethos opposes the remuneration report of UBS and Credit Suisse despite several amendments introduced in the remuneration system in response to serious concerns raised by the shareholders last year. The variable remuneration is too high and not capped. More than 80% of the remuneration of the executive management is variable, which can lead to behaviour not in the long term interests of the shareholders. At Credit Suisse, this is especially surprising since the net income objectives of the variable remuneration were not achieved.

Also, it is not acceptable that the fixed salaries of the executive management and many other employees were significantly raised without due justification. For example, the fixed remuneration of Credit Suisse's executive management was doubled in 2010. Finally, board member fees of both banks are the highest in Switzerland and among the most generous worldwide. Excluding the chairman and vice chairman, the members received on average CHF 707'000 at UBS and CHF 596'000 at Credit Suisse.