After it barely pulled through the recent banking contagion that bore witness to several major banks collapsing within days of each other, Credit Suisse is now expecting the bonuses of its top executives to be slashed or canceled entirely in the newest order by Switzerland’s authorities.
Indeed, after the state-backed takeover by UBS and a temporary suspension of its executive board, the bosses at Credit Suisse now face a cancelation or significant reduction of all their unpaid bonuses by 50% or 25%, according to a statement by the Swiss Federal Council published on April 5.
Slash galore
As the Swiss government’s cabinet explained, the decision, instructing the country’s finance ministry to carry out these steps, will include the top three tiers of Credit Suisse senior management:
“During its meeting on 5 April 2023, the Federal Council instructed the Federal Department of Finance (FDF) to cancel, or reduce by 50% or 25%, all outstanding variable remuneration for the top three levels of management at Credit Suisse.”
As the FDF further highlighted, this decision will impact about 1,000 Credit Suisse employees, “who will be deprived of a total of approximately CHF 50-60 million” (around $55.3 million – $66.3 million), whereas other 49,000 employees have already born the burden due to the drop in the bank’s stock price.
Sharing responsibility
Specifically, the members of the executive board, at the highest management level, will have their outstanding bonuses fully canceled. The management members one level below the executive board will have their bonuses reduced by half, while those two levels below will see a 25% reduction.
In terms of reasoning behind such a differentiated approach, the government has specified the consideration of “the most senior managers’ responsibility for the situation at Credit Suisse.”
On top of that, the government also ordered Credit Suisse to “examine whether variable remuneration already paid out can be recovered, and report to the FDF and the Swiss [financial regulator, Financial Market Supervisory Authority (FINMA)].” Such a course of action was earlier anticipated in a package of measures supporting the UBS takeover of Credit Suisse.
As a reminder, Credit Suisse had to be sold in order to survive the crisis that is still threatening to topple other banking giants, including Deutsche Bank, as José Manuel Campa, the current chairperson of the European Banking Authority (EBA), has warned that the banking sector was still very vulnerable to risks in the financial system.
Source: https://finbold.com/switzerland-to-slash-or-cancel-entirely-the-bonuses-of-top-credit-suisse-executives/