Switzerland to cancel, cut top Credit Suisse executives’ bonuses
TOP Credit Suisse Group executives will have outstanding bonuses cancelled or cut by up to half, in a step ordered by the Swiss government following the state-backed takeover by UBS Group.
After a temporary suspension on Mar 21, the government said it has now decided that the executive board will have all outstanding variable remuneration to the end of 2022 cancelled, while top managers one and two levels below will have theirs reduced by 50 per cent and 25 per cent respectively, according to a statement on Wednesday (Apr 5).
The same measures apply for compensation that had begun accruing for this year. In total the steps will affect around 1,000 Credit Suisse employees and bonuses worth between 50 million Swiss francs (S$73.3 million) and 60 million Swiss francs.
The move adds to the pain of senior bankers who had already seen the value of their awards crushed by the stock’s plunge in the run-up to the crisis that gripped the historic bank in March. The executive board have already foregone their bonuses for 2022, and shareholders on Tuesday rejected the management’s fixed pay proposal.
Credit Suisse must also look at potentially recovering bonuses already paid out, and report back to both the Swiss finance ministry and financial regulator Finma on the matter, according to the statement.
Government aid
The government is at liberty to impose pay-related measures on a major bank if it is benefiting from state aid, as is now the case with Credit Suisse.
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The government decided against penalising lower-ranking Credit Suisse employees and said last month that the bank could pay cash bonuses to employees for last year.
All employees have already seen a total loss of more than two billion francs from their deferred variable compensation due to the bank’s share price drop, it said.
The government also said that UBS must make sure its own pay structures encourage the employees handling the sale of Credit Suisse assets to maximise profits and avoid losses that would invoke the state guarantee it received last month.
UBS must take the first five billion francs in potential losses, before a nine billion franc guarantee from the Swiss state kicks in to cover losses incurred from selling certain Credit Suisse assets.
“The Federal Council has recognised UBS’ part in enabling a solution for Credit Suisse,” UBS said in a statement. “This has no impact on the UBS compensation structure and fundamentals, and reinforces our pay for performance approach, with an ongoing focus on risk management.”
Credit Suisse shareholders voiced their discontent with the discrepancy between bonuses and profits at the firm’s final annual meeting on Tuesday. In the past dozen years, Credit Suisse put 35 billion francs into its annual bonus pools, according to Bloomberg calculations. The total profits it generated in that period: 35 million francs. BLOOMBERG
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