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The national flag of Switzerland flies in front of the Credit Suisse logo in Lucerne, Switzerland.

Photo: Arnd Wiegmann/REUTERS

The world’s largest sovereign-wealth fund wants a better explanation and more accountability for recent mishaps at Credit Suisse CS -2.18% Group AG.

Norges Bank Investment Management, the arm of the Norwegian central bank that operates the nearly $1.3 trillion fund, said Sunday it supports a shareholder proposal for a special audit into the bank’s relationship with Greensill Capital, a financing partner that went bankrupt in March 2021. It said it is also voting at the bank’s annual shareholder meeting Friday against a proposal to clear Credit Suisse’s board and senior management of legal liability.

The votes heap more pressure on Credit Suisse, which has been taking steps to improve its culture after a spate of scandals. Greensill Capital went bankrupt in March 2021, putting at risk billions of dollars in investments in funds Credit Suisse ran via an asset-management arm. The same month, the bank lost roughly $5 billion exiting large stock positions of family office Archegos Capital Management

A shareholder vote to clear the board of liability was skipped last year while Credit Suisse assessed the damage from the twin scandals. The bank released a report in July on Archegos by a law firm but has said it won’t release the Greensill report because it could hurt its chances of recovering assets. The vote Norges said it would oppose on Friday applies to the 2020 fiscal year and excludes matters related to Greensill. It will support a separate vote for the 2021 fiscal year legal liability. 

Discharging liability means shareholders can’t later sue the board unless new information comes out that wasn’t known at the time. The vote is largely seen as an endorsement of the board and senior management’s performance during the year.

The oil fund, as the Norges unit is known, has a 1.3% stake in Credit Suisse. It owns on average 1.3% of the world’s listed companies, making it a large investor in companies such as Apple Inc. and Alibaba Group Holding Ltd. Its decisions are closely tracked by other sovereign-wealth funds and large pools of capital.

Proxy advisers Institutional Shareholder Services Inc. and Glass, Lewis & Co. also advised shareholders to vote against discharging the board of legal liability for 2020, though they advised approving it for 2021. 

Norges said it would support a proposal from a foundation representing Swiss pension funds for a special audit into the bank’s decisions around Greensill. The bank released some limited details this month on its decisions around Greensill. It said it fired 10 people, including the head of its asset management arm, and is clawing back $43 million in pay.

The Norwegian fund said, “where a company’s disclosure does not meet our needs as a financial investor, we will consider supporting a well-founded shareholder proposal calling for reasonable disclosure.” 

As part of its turnaround effort, Credit Suisse is reviewing senior appointments and succession plans, The Wall Street Journal reported on Sunday.  Long-serving executives in roles including the chief financial officer, general counsel and Asia head could be shifted out as the bank makes changes, said people familiar with the matter.

The bank has said it would post a first-quarter loss Wednesday. Last week, it said litigation provisions will be about $740 million in the quarter because of developments in legal cases, which include a former client winning a roughly $555 million court award in Bermuda

Write to Julie Steinberg at [email protected] and Margot Patrick at [email protected]

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Source: WSJ

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