Switzerland bans deferred bonuses for Credit Suisse staff
The Swiss government has banned Credit Suisse from paying deferred bonuses awarded before 2022 in a move that sparked more upset from staff at the failed bank.
The federal finance ministry said on Tuesday it had imposed “remuneration-related measures” on Credit Suisse as a result of the use of taxpayer funds to facilitate its $3.25bn takeover by rival UBS.
“More happy news,” said one Credit Suisse banker. “Maybe UBS will turn up to find they have bought empty offices . . . Our shares are near worthless.”
Credit Suisse management had tried to avoid a mass walkout of staff by promising to maintain planned pay awards. “We will pay salary and bonus, where outstanding, as per the previously communicated schedule,” the bank said in an internal email on Sunday night.
But the federal council, Switzerland’s executive body, has ordered Credit Suisse not to pay awards from previous years, while allowing the bank to pay bonuses awarded for 2022 for the sake of “legal certainty” and to “avoid impacting employees who did not themselves cause the crisis”.
The federal council has also asked the finance ministry to draw up plans to control payouts to Credit Suisse staff for all future bonus rewards.
Public anger over banker bonuses has remained high in Switzerland since the financial crisis. Protests erupted in Zurich on Monday in front of Credit Suisse’s headquarters over the proposed use of public money in the rescue deal. Bern has written a SFr9bn guarantee to UBS to support its digestion of its rival and authorised a SFr100bn liquidity support facility from the Swiss National Bank.
Swiss political parties from across the spectrum have been in uproar over the bailout. The largest, the rightwing populist Swiss People’s Party, said Credit Suisse bankers have “taken millions in pay without taking responsibility”.
The country’s second largest party, the Social Democrats, have pledged legislation for a ban on all bonus payments and a salary cap at all large banks receiving state help.
A second Credit Suisse banker said: “We thought it couldn’t get any worse and it just did. Essentially, this seems like the government is helping UBS unwind the investment bank but cutting everybody’s pay.”
A third said: “We are not entirely clear what will happen next but morale is so down it’s hard to even describe.”
The finance ministry declined to comment on whether clawback measures were also under consideration. Credit Suisse paid out SFr972mn to its bankers last year as part of rewards deferred from previous years. Credit Suisse declined to comment on the government intervention.
According to the company’s annual report, released last week, at the end of 2021, Credit Suisse bankers were owed SFr2.793bn ($3bn) in deferred compensation, based on the bank’s then share price. At the end of 2022, SFr1.25bn in deferred compensation awards was owed.