A total of up to CHF 60 million
Switzerland cuts bonuses for Credit Suisse bankers
04/06/2023, 2:18 p.m
The top management of the bankrupt bank Credit Suisse has to do without millions: Outstanding bonuses are not paid out. In this way, the Swiss government wants the bankers at the institute to feel their responsibility for the disaster, including financially.
The Swiss government is canceling all outstanding bonus payments to the boardroom of the scandalous bank Credit Suisse. The Swiss Federal Council announced that this would take into account the “responsibility of top management for the situation at Credit Suisse”. Bonus cuts are planned for the two management levels below the executive board. To restore confidence in the sector, the government recently arranged for Credit Suisse to be taken over by rival bank UBS.
The last general meeting of the major bank Credit Suisse, which had been shaken by scandals for two years, took place on Tuesday. She is said to have facilitated money laundering and assisted in conducting business with criminals and controversial politicians and officials. Massive losses followed, dwindling customer and investor confidence and finally financing problems.
When the bankruptcy of the Silicon Valley Bank in the USA shook the entire banking sector and the largest shareholder no longer wanted to invest any more capital, Credit Suisse could no longer be held despite a cash injection from the central bank. Even before the markets opened on March 20, the government, regulator FINMA and the central bank arranged for UBS to buy it.
Because the Swiss government put together a package of measures to support the takeover, which includes extensive liquidity guarantees, the country’s banking law allows it to order remuneration measures. This is especially true when it comes to a systemically important bank.
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The move now affects around 1,000 employees who will have to forego a total of around 50 to 60 million Swiss francs (up to 60.8 million euros). For the Executive Board, all outstanding variable remuneration will no longer apply until the end of 2022, and the bonuses for the two management levels below the Executive Board will be reduced by 50 and 25 percent, respectively.
In addition, all premiums due for the top three management floors until UBS takes over in full are to be canceled or reduced this year. Credit Suisse must also check whether bonuses that have already been paid out can be reclaimed and report to the Ministry of Finance and FINMA.
The government stressed that the loss from deferred variable compensation for all 49,000 employees amounted to CHF 635 million – at the time these bonuses were awarded, they were worth CHF 2.76 billion due to the higher share price. All employees would have had to accept significant losses.
To accompany the takeover process, UBS brought back its former boss Sergio Ermotti. He took over the scepter at the bank on Wednesday. The takeover now creates another heavyweight – because of its size and relevance for the financial sector, the step is also viewed critically in Switzerland.