UBS shareholders punish management following massive French fine

UBS shareholders on Thursday dealt the bank's directors and executives a rare rebuke, refusing to release them from personal liability over a massive fine imposed by France earlier this year, in a signal of deep investor frustration.

UBS shareholders punish management following massive French fine
UBS board chairman Axel Weber, seen here in a 2013 photo, said in a statement he understood shareholder frustration. File photo: AFP

The so-called discharge vote is typically a formality at the bank's annual shareholders meeting that sees the UBS board securing protection from any legal action over their performance during the previous year. 

But shareholder anxiety is running high after UBS was fined a whopping €3.7 billion ($4.1 billion) in February by a French court over encouraging customers to commit tax fraud.

UBS has denied the allegations announced plans to appeal.

Read also: UBS beats analyst expectations despite market chill

At Thursday's meeting, 41.67 percent voted in favour of the discharge, with 41.64 percent voting against and 16.69 percent abstaining. 

Because the board did not secure 50 percent, the discharge was “rejected”, UBS said in a statement (here in English).

“I interpret your decision as a reflection of your concern about uncertainty surrounding the ongoing court case in France and that you want to keep all possible legal options open. I can understand that,” UBS board chairman Axel Weber told shareholders, according the statement. 

Weber also defended the bank's management, saying “France did not show in any way that UBS failed to comply with the regulations that applied at the time in France and Switzerland.  

UBS, the world's largest private bank, had tried to negotiate a settlement to avoid the court showdown, but failed to agree on a fine with French prosecutors.

The court found UBS guilty of “aggravated money laundering” by helping clients evade French taxes between 2004 and 2012, estimating the breaches were “exceptionally serious”.

Five of six former UBS top officials received suspended prison sentences and individual fines of up to €300,000.

Several shareholder groups had called for disapproving the discharge motion also over the bonuses for bank executives, which were called “excessive” by the Swiss foundation Ethos following the French fine.

Shareholder revolts by refusing to back a company's executives at the annual shareholder meetings are very rare.

Last week shareholders of the German chemicals group Bayer rejected by 55 percent the discharge motion for management, angered about the costly acquisition of US rival Monsanto which finds itself under an onslaught of lawsuits over its popular Roundup weedkiller.

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Reader question: Can a foreign national obtain a loan in Switzerland and under what conditions?

When it comes to borrowing money from a Swiss bank, nationality may play a role in some cases, but not in others. This is what you should know about this process.

Reader question: Can a foreign national obtain a loan in Switzerland and under what conditions?
Getting a losn in Switzerland is subject to many conditions. Photo by Claudio Schwarz/Unsplash

Like almost everything in Switzerland, consumer loans are regulated by legislation, in this case the Consumer Credit Act.

It defines a loan as between 550 and 80,000 francs, “offered by commercial providers of financial services”. Lower or higher amounts are not subject to the Consumer Credit Act.

As is the case in many other countries, Swiss banks have strict criteria about who they lend money to. After all, no financial institution wants to deal with people who are not creditworthy.

Whether or not a foreign national can borrow money from a bank depends on their permanent place of residence and permit status.

As a rule, Swiss lenders don’t give loans to non-residents. So if you reside abroad, there is practically no chance that a bank in Switzerland will lend you money.

However, some financial institutions make exceptions for cross-border workers. If you fall under this category, you can use this interactive tool, select “ Permit G” under “Residence Permit” and see what, if any, options, there are.

READ MORE: EXPLAINED: What cross-border workers should know about taxation in Switzerland

If you are a foreign national but have a permanent residence status (Permit C), your chances of getting a loan are practically the same as those of Swiss citizens — provided, of course, that you meet all the requirements set by lenders (see below).

What about other permit holders?

If you have a B Permit, you might be approved for a loan, depending on how long you have had this permit — obviously, the longer the better.

However, “you may be offered a higher interest rate or a limited loan amount. This is because of the statistically higher probability that you will return to your home country. Some lenders require the loan to be repaid by the time the B permit expires”, according to consumer comparison site 

Holders of other, temporary or conditional permits are not accepted.

READ MORE: ‘A feeling of belonging’: What it’s like to become Swiss

What conditions — other than residence permit — should you fill to be considered for a loan?

You must be at least 18 years of age, though additional restrictions may apply to applicants under 25 — for instance, a higher interest rate or a limited loan amount. That’s because “lenders are generally more cautious with young applicants as their financial circumstances are usually less settled and the risk of default is deemed to be higher,” Comparis noted.

The same cautious approach applies to pensioners, especially those who have no regular income. The social security payments (AHV/AVS) do not count as income for the purpose of the loan.

There is also other eligibility criteria, based on employment status and salary. People with a regular income have a higher chance of obtaining a loan than those who are self-employed, temporarily employed, work on hourly basis or, logically, unemployed.

Other factors, including your existing debts, are also taken into account in the decision process.

Basically, lenders favour applicants with a stable income and good financial standing, in much the same way as supplemental health insurance carriers prefer young and healthy people.

Keep in mind that if your loan application is rejected, this will be recorded in the database of the  Central Office for Credit Information, making it more difficult, though not impossible, to get a loan in the future.

The same rules do not apply to American citizens

That’s because Swiss and European banks are subjected to US demands to disclose the assets of Americans overseas in order to prevent tax evasion.

As adherence to these requirements is a major headache for the banks and in some cases also violates their country’s privacy laws, financial institutions prefer not to deal with Americans at all, even those who are permanent residents.

If you are a US citizen who also has Swiss nationality, you may have an easier time of it, but could still face hurdles in obtaining loans and other banking services.

There is no immediate relief in sight, although many organisations representing Americans abroad are lobbying in Washington to change the existing legislation.