Credit Suisse staff bonuses tied to AT1 bonds also wiped out
Sign up now: Get ST's newsletters delivered to your inbox
Credit Suisse shareholders voiced their discontent with the discrepancy between bonuses and profits at the firm’s final annual meeting this month.
PHOTO: REUTERS
ZURICH – Credit Suisse Group has informed employees that deferred awards meant to mirror bonds that were wiped out in the firm’s emergency sale to UBS Group will also be written to zero.
The move, described by people briefed on the decision, erases so-called contingent capital awards (CCAs) that had been worth 360 million Swiss francs (S$537.4 million) at the end of 2022. This adds to the pay pain for senior bankers who have seen share awards plummet in value and some bonuses cut or cancelled by government decree.
The Swiss lender was forced to trigger a write-down of about US$17 billion (S$22.7 billion) of debt known as Additional Tier 1 (AT1) capital because the deal involved government support. While the CCAs were designed to carry similar risks, the bank held discussions with regulator Finma about potentially excluding them from the write-down, said the people, asking to remain anonymous describing private talks.
One of the conditions of the CCAs is that the instruments have no value in the event of a collapse of the bank. But the nature of the rescue – couched as a private takeover – left some employees wondering if it was feasible the deal may not trigger this.
Thousands of managing directors and director-level staff at Credit Suisse have received at least part of their bonus in contingent capital units in recent years. In 2021, just over 5,000 employees received them.
Earlier in April, the Swiss government decided that Credit Suisse’s executive board and its top managers one and two levels below the board would see outstanding bonuses cancelled or cut by up to half. This came on top of a loss in value of more than 2 billion Swiss francs to employee awards from the stock decline.
Credit Suisse shareholders voiced their discontent with the discrepancy between bonuses and profits at the firm’s final annual meeting in April. In the past dozen years, the company put 35 billion francs into its annual bonus pools, according to Bloomberg calculations. The total profits it generated in that period: 35 million francs. BLOOMBERG
