24th May 2023 – (Zurich) Credit Suisse senior managers will not receive their outstanding bonus payments for 2022, following an order by the Swiss Finance Ministry on 23rd May. The order, which affects the bank’s top three levels of management, comes after the Swiss government’s multi-billion franc state rescue of Credit Suisse, Switzerland’s second-largest bank. Governments rarely halt bonus payouts, but in this case, the public has opposed them at Credit Suisse, whose rescue was backed by approximately 260 billion Swiss francs in state funding and guarantees.
Around 1,000 employees will be affected by the ruling, which will deprive them of payments of approximately 50 million Swiss francs to 60 million Swiss francs in variable remuneration accrued up to the end of 2022. The executive board will have its outstanding bonus payments up to the end of 2022 cancelled, while managers one level below will have their payments cut by 50%. Managers two levels below will see their outstanding variable payments reduced by 25%, according to the ministry.
The ministry said in a statement that “This takes account of the most senior managers’ responsibility for the situation at Credit Suisse in a differentiated manner. Moreover, variable remuneration for these management levels due in 2023 will be cancelled or reduced on a pro-rata basis until the takeover is completed.”
The ministry also instructed Credit Suisse to investigate the possibility of recovering remuneration already paid out to members of group management since 2019.
This order follows temporary measures implemented by the Swiss government in March, which suspended variable payments shortly after the emergency takeover by UBS was agreed upon. As part of the rescue package orchestrated by Swiss authorities in March, UBS will pay 3 billion Swiss francs for Credit Suisse and assume up to 5 billion francs in losses. In return, the Swiss government agreed to shoulder up to 9 billion francs in potential losses from the deal and guarantee liquidity assistance of up to 100 billion francs.
The Finance Ministry also ordered UBS on 23rd May to design a pay scheme to incentivise staff responsible for selling off Credit Suisse assets to minimise losses on the sales. The ministry hopes that this will provide an incentive to achieve the lowest possible losses, in order to avoid the utilisation of the federal guarantee.