The credit crisis that has resulted in more than $100bn (€67.9bn) in writedowns at investment banks, the sacking of top executives and sharp share price falls across the sector is having another and possibly more long-term impact.
The sub-prime debacle has added impetus to the rise of corporate activism in the US. When banks’ annual meetings get under way in April, directors are likely to face tough questions about their role in the crisis and whether they did enough to stop the problems at an early stage.
The Council of Institutional Investors, a US shareholder rights organization of 130 public sector, union and corporate pension funds, says the increase in activism “reflects the fact that large investors can do better than plunk money down and hope for the best – they can take steps to increase the chance the best will occur."
One of the biggest groups organizing shareholder protest is CtW Investment Group, an umbrella body that represents nearly six million workers from truck drivers to farm workers and owns assets in pension funds worth nearly $1.4 trillion. CtW has written to the boards of six banks demanding some answers.
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