Swiss Authorities Eliminate, Cut Credit Suisse Executives’ Bonuses

Prior to the $3.25 billion emergency takeover of Credit Suisse by UBS, mandated by Swiss authorities more than two weeks ago to avert a global financial crisis, the struggling Swiss bank had been contemplating for several months about slashing bonuses for its bankers. 

On Wednesday afternoon, the Swiss government, not Credit Suisse bank executives, moved forward with a plan to cancel or reduce bonuses. The Swiss Federal Council directed the Federal Department of Finance to eliminate or decrease top Credit Suisse bankers’ bonuses by 25% to 50%. According to the SFC statement, this action would affect bankers in the top three tiers of management.

For the bonuses already paid out, Credit Suisse has to examine whether some of those payments to employees can be recovered. The lender would have to report to FDF and the Swiss Financial Market Supervisory Authority on the matter. 

Bloomberg noted UBS is required that its “remuneration system continues to give appropriate consideration to risk awareness and includes as a criterion the successful, i.e., most profitable possible, realization of the Credit Suisse assets covered by the state loss guarantee.” 

The Swiss government’s move might lead to more Credit Suisse bankers jumping ship. Days after the state-brokered takeover of the troubled bank, there were reports of employees talking with job recruiters from competing firms. 

Perhaps UBS chair Colm Kelleher’s speech to shareholders on Wednesday, outlining the takeover of Credit Suisse entails “a huge amount of risk,” might be why Swiss authorities plan to cancel or reduce top banker bonuses. 

The Swiss government is penalizing top bankers and avoiding impacting lower-tier employees who weren’t responsible for causing the crisis.