Breaking News
Get Actionable Insights with InvestingPro+: Start 7 Day FREE Trial Register here
Investing Pro 0
Ad-Free Version. Upgrade your Investing.com experience. Save up to 40% More details

Credit Suisse hikes cash bonuses as talent war rages

Stock MarketsJan 28, 2022 10:31AM ET
Saved. See Saved Items.
This article has already been saved in your Saved Items
 
© Reuters. FILE PHOTO: The logo of Swiss bank Credit Suisse is seen at a branch office in Zurich, Switzerland, November 3, 2021. REUTERS/Arnd WIegmann/File Photo

By Brenna Hughes Neghaiwi and Oliver Hirt

ZURICH (Reuters) -Credit Suisse is boosting cash payouts for senior bankers, it told employees on Friday, as it tries to retain top performers after a year of scandals saw its shares lose more than a quarter of their value.

The bank, which has been hit by a string of scandals and losses, is increasing the cash portion of short term bonuses senior staff receive and reducing the amount they get in shares that vest after one year, according to a memo seen by Reuters.

Across the financial industry, banker pay jumped in 2021 due to a bumper year for trading and dealmaking and firms are finding it harder to find and keep top performers. On Thursday, Deutsche Bank (DE:DBKGn) said compensation at its investment bank rose 30% in the fourth quarter of last year.

Switzerland's second-biggest bank, meanwhile, faced an exodus https://www.reuters.com/business/finance/credit-suisse-investment-bank-set-archegos-aftershocks-2021-07-27 of dealmakers and other senior bankers in 2021 after heavy losses prompted sackings, bonus cuts and an overhaul of its strategy and top management.

Now, in an unusual move, Credit Suisse (SIX:CSGN) is upping top earners' immediate cash payment, although they can only keep it if they stay with the firm for three years.

"For Managing Directors and Directors, this change is intended to rebalance the amount of immediate cash that is paid compared to prior years," executive managers told employees in the internal memo confirmed by the company.

Those receiving upfront cash would have to repay part of it if they left the bank within three years.

While clawback provisions - which often cover portions of bonuses composed of shares yet to vest - are typical in bankers' variable compensation and mean bonuses can be recouped if bankers are found to have violated certain rules, the move to recoup cash bonuses for leavers is unusual.

The new plan will not alter the proportion of bonuses covered by deferred compensation, which in the European Union and Britain must cover at least 40-60% of variable compensation, because longer term bonuses, which are paid in shares and vest after three years, will remain the same portion of the overall payout.

The changes apply to staff who earn more than $250,000.

Credit Suisse racked up a multibillion-dollar loss in 2021 on the default of a single investment banking client, while its asset management was hit by the collapse of $10 billion in funds linked to insolvent supply chain finance firm Greensill.

It has been trying to turn the page on a slew of negative headlines and reform its risk management culture, an effort set back by the abrupt departure this month of the chairman brought in just nine months earlier to lead that transformation.

On Tuesday, it warned it would report a fourth-quarter loss based on fresh legal costs and a slowdown in its trading and wealth management divisions.

With its new incentives scheme, Credit Suisse told employees it aimed to reinforce a culture "based on personal accountability and responsibility" that would better align compensation with "positive behaviors".

"With regards to executive compensation, Credit Suisse aims to strike an appropriate balance with the interests of shareholders and wider stakeholders," the bank said in a statement. "We have also said that we will further align remuneration with our new strategic objectives, including our renewed focus on risk management."

It introduced a one-time share plan for senior managers, which will vest in three years' time, but "only if certain metrics tied to our strategic objectives are reached."

Credit Suisse hikes cash bonuses as talent war rages
 

Related Articles

Add a Comment

Comment Guidelines

We encourage you to use comments to engage with other users, share your perspective and ask questions of authors and each other. However, in order to maintain the high level of discourse we’ve all come to value and expect, please keep the following criteria in mind:  

  •            Enrich the conversation, don’t trash it.

  •           Stay focused and on track. Only post material that’s relevant to the topic being discussed. 

  •           Be respectful. Even negative opinions can be framed positively and diplomatically. Avoid profanity, slander or personal attacks directed at an author or another user. Racism, sexism and other forms of discrimination will not be tolerated.

  • Use standard writing style. Include punctuation and upper and lower cases. Comments that are written in all caps and contain excessive use of symbols will be removed.
  • NOTE: Spam and/or promotional messages and comments containing links will be removed. Phone numbers, email addresses, links to personal or business websites, Skype/Telegram/WhatsApp etc. addresses (including links to groups) will also be removed; self-promotional material or business-related solicitations or PR (ie, contact me for signals/advice etc.), and/or any other comment that contains personal contact specifcs or advertising will be removed as well. In addition, any of the above-mentioned violations may result in suspension of your account.
  • Doxxing. We do not allow any sharing of private or personal contact or other information about any individual or organization. This will result in immediate suspension of the commentor and his or her account.
  • Don’t monopolize the conversation. We appreciate passion and conviction, but we also strongly believe in giving everyone a chance to air their point of view. Therefore, in addition to civil interaction, we expect commenters to offer their opinions succinctly and thoughtfully, but not so repeatedly that others are annoyed or offended. If we receive complaints about individuals who take over a thread or forum, we reserve the right to ban them from the site, without recourse.
  • Only English comments will be allowed.

Perpetrators of spam or abuse will be deleted from the site and prohibited from future registration at Investing.com’s discretion.

Write your thoughts here
 
Are you sure you want to delete this chart?
 
Post
Post also to:
 
Replace the attached chart with a new chart ?
1000
Your ability to comment is currently suspended due to negative user reports. Your status will be reviewed by our moderators.
Please wait a minute before you try to comment again.
Thanks for your comment. Please note that all comments are pending until approved by our moderators. It may therefore take some time before it appears on our website.
Comments (1)
Robert Copeland
Robert Copeland Jan 29, 2022 4:57PM ET
Saved. See Saved Items.
This comment has already been saved in your Saved Items
Isn't that special, they can certainly afford to. These guys and DutcheBank should be married, moreorless are in some respects. Lol!
 
Are you sure you want to delete this chart?
 
Post
 
Replace the attached chart with a new chart ?
1000
Your ability to comment is currently suspended due to negative user reports. Your status will be reviewed by our moderators.
Please wait a minute before you try to comment again.
Add Chart to Comment
Confirm Block

Are you sure you want to block %USER_NAME%?

By doing so, you and %USER_NAME% will not be able to see any of each other's Investing.com's posts.

%USER_NAME% was successfully added to your Block List

Since you’ve just unblocked this person, you must wait 48 hours before renewing the block.

Report this comment

I feel that this comment is:

Comment flagged

Thank You!

Your report has been sent to our moderators for review
Continue with Google
or
Sign up with Email