With Credit Suisse in the process of being acquired by local rival UBS, the Swiss Federal Council has told the collapsed bank to cancel or reduce all outstanding bonus payments for the top three levels of management.
The bank has also been instructed to examine whether bonus payments already paid can be recovered, and must report its movements on bonuses until the merger with UBS is complete..
Swiss law allows the Council to impose bonus-related measures on a systemically important bank if it received state aid from federal funds. The emergency merger of Credit Suisse with UBS was facilitated with around $280 billion worth of federal funds.
Bonus payments at the bank have been central to the public backlash, with the government taking this unusual move in an effort to restore faith in this Swiss financial sector’s typically secretive operations.
The Council said that bonus up to the end of 2022 will be cancelled for the Credit Suisse executive board, halved for management one level below the board and reduced by 25 per cent for the two levels below. In total, around 1,000 employees will be impacted and miss out on a cumulative 50-60 million Swiss francs.
The executive board had already voluntarily agreed to forgo their 2022 bonuses, as detailed in the bank’s recently published annual report.
Poor performance at the bank had seen its total bonus pool reduced from 2.76 billion Swiss francs to just 635 million to be split across 50,000 employees.
At the bank’s final shareholder meeting earlier this week, chairman Axel Lehman said that he was “truly sorry” for the bank’s collapse and apologised "that we were no longer able to stem the loss of trust."
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