Credit Suisse managers’ 2022 bonuses cancelled or cut by Swiss government

ZURICH (Reuters) – Credit Suisse senior managers will have their outstanding bonus payments for 2022 either cancelled or reduced following an order issued on Tuesday by the Swiss Finance Ministry.

The order affects the top three levels of Credit Suisse management and follows the multi-billion franc state rescue of Switzerland’s second biggest bank.

Governments rarely impose a complete halt to bonus payouts, but in Switzerland there has been public backlash against them at Credit Suisse, whose rescue earlier this year was backed by roughly 260 billion Swiss francs of state funding and guarantees.

The ruling will affect around 1,000 employees, who will be deprived of payments of approximately 50 million Swiss francs ($56.25 million) to 60 million Swiss francs ($67.50 million) 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 the payments cut by 50%.

Managers two levels below will see their outstanding variable payments reduced by 25%, the ministry said.

“This takes account of the most senior managers’ responsibility for the situation at Credit Suisse in a differentiated manner,” the ministry said in a statement.

“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 said Credit Suisse should look into potentially recovering remuneration already paid out to members of group management since 2019.

The order follows temporary measures on suspending variable payments from the Swiss government in March shortly after the emergency takeover by UBS was agreed.

In a 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 has agreed to shoulder up to 9 billion in potential losses from the deal, as well as guarantee liquidity assistance of up to 100 billion francs.

The Finance Ministry also said on Tuesday it had ordered UBS to design a pay scheme to incentivise staff responsible for selling off Credit Suisse assets to make the smallest possible losses on the sales.

“This is intended to provide an incentive to achieve the lowest possible losses, in order to avoid, wherever possible, the utilisation of the federal guarantee,” the ministry said.

($1 = 0.8889 Swiss francs)