February 23, 2024

The Swiss National Bank came into the spotlight after assisting UBS in its takeover of Credit Suisse.

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The Swiss National Bank will hold its annual shareholder meeting in Bern on Friday to protest its action on climate change and its emergency sale of credit suisse swiss competitor Swiss bank.

The central bank played a key role in brokering a rescue of Credit Suisse over a chaotic weekend in March, as deposit outflows and a plunge in share prices brought the 167-year-old institution to the brink of collapse.

The deal remains mired in controversy and legal challenges, not least over a lack of investor input and the unconventional decision to cancel 15 billion Swiss francs ($16.8 billion) of Credit Suisse’s AT1 bonds.

The collapse of the country’s second-largest bank sparked widespread discontent and severely damaged Switzerland’s long-standing reputation for financial stability. It also comes against a red-hot political backdrop, with a federal election due in October.

While the SNB will undoubtedly face shareholder skepticism and dissatisfaction with the situation at Credit Suisse on Friday, the country’s network of climate activists will also seek to use the central bank’s unwelcome spotlight to challenge its investment policy.

Unlike many major central banks, the SNB runs a listed company, with more than half of its roughly 25 million Swiss francs ($28.1 million) share capital held by public shareholders — including Swiss cantons (cantons) and cantonal banks — while the rest shares are held by private investors.

A shareholder walks past a giant inflatable balloon to prevent climate activists protesting ahead of the UBS bank shareholders meeting in Basel, following the Swiss government’s hastily arranged takeover of Credit Suisse by UBS AG, April 5, 2023. financial crisis. (Photo: Fabrice COFFRINI/AFP) (Photo: FABRICE COFFRINI/AFP via Getty Images)

Fabrice Coferini | AFP | Getty Images

More than 170 climate activists have now bought a stake in SNB, according to the SNB Alliance, a dedicated pressure group that spun off from Alliance Climatique Suisse, a group representing some 140 Swiss environmental movement groups. umbrella organization.

Climate activist Jonas Kampus told CNBC on Wednesday that about 50 activist shareholders will be in attendance on Friday, with more than a dozen speeches planned by the activists at the annual shareholder meeting. Protests will also be held outside the event.

The group called on the SNB to sell its holdings in “companies that cause serious environmental damage and/or violate fundamental human rights”, pointing to the central bank’s own investment guidelines.

In particular, activists highlighted the SNB’s holdings in Chevron, Shell, TotalEnergies, ExxonMobil, Repsol, Enbridge and Duke Energy.

Members of the Ugandan community object TotalEnergies’ East Africa Crude Pipelineare also due to attend on Friday, with one of them planning to address the SNB board directly on stage.

In addition to a full exit from fossil fuel investments, activists are demanding that the SNB implement a “one-to-one rule” – a capital requirement designed to prevent banks and insurers from benefiting from activities that would be detrimental to the transition to net zero.

In this case, the SNB would be required to set aside CHF 1 from its own funds to cover potential losses for every CHF allocated to the exploration or extraction of new fossil fuels.

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Ahead of the AGM, the central bank has refused to schedule three motions from activists on legal grounds and said on Wednesday it would not comment on plans for the protest, instead adding CNBC to its formal agenda. However, the mere process of filing the motion has helped broaden public and political awareness of the issues, Kramps said.

“There’s public pressure and political pressure from all sides that the SNB needs to change. Right now, the SNB is really far behind in terms of what other central banks are doing,” Kamps told CNBC by phone, adding, The SNB has a “very conservative view” on its mandate on price stability and financial stability, which is “very narrow”.

Shareholders’ cause has also been backed by a parliamentary motion, backed by lawmakers ranging from the Greens to centre-right parties, to expand the SNB’s mandate to cover climate and environmental risks.

“While other central banks around the world have gone far beyond the SNB in ​​this regard – which has repeatedly shown that its mandate does not have enough wiggle room to fully consider climate risk and monetary policy tools in its decision-making,” said the Green MP Delphine Klopfenstein Broggini wrote in a motion filed on March 16.

SNB President: Stability is our main goal

“The current parliamentary initiative aims to secure this room for maneuver and makes it clear that the SNB must take climate risks into account when implementing monetary policy.”

The motion argues that climate risks are “classified globally as significant financial risks that could endanger financial and price stability” and concludes that, as other central banks are seeking to do, “it is in line with the SNB to actively address these issues.” interests of Switzerland as a whole”.

Kamps and his campaigners hope the national focus on the SNB in ​​the wake of the Credit Suisse crisis has provided fertile ground for heightened concerns about climate risk, which he says poses “bigger risks to the financial system” than credit’s potential impact. several times” the collapse of Switzerland.

“We think there is also a window of opportunity on the SNB side because they might be a little more humble this time around because they clearly did something wrong with the Credit Suisse crash as well,” Kamps said.

He noted that the central bank has been claiming that climate risk is factored into its models and that there is “no need for further engagement with the public to increase transparency”.

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“At the core of what the SNB does is that the public just needs to trust them. Trust is very important to a central bank, and asking the public to trust without further evidence that we can trust them is pretty scary in the long run, especially when We don’t know what their climate models are,” he said.

The SNB has long argued that its passive investment strategy of investing in global indices is part of its mission to maintain market neutrality, not for the sake of Central Bank Engagement in Climate PolicyActivists hope that mounting political pressure will eventually force a change in legislation to expand the SNB’s mandate to accommodate risks to financial and price stability posed by climate and human rights.

UBS and Credit Suisse also faced protests from climate activists at their respective annual shareholder meetings earlier this month for investing in fossil fuel companies.