Switzerland’s government said on Tuesday that Credit Suisse was ordered to “temporarily” suspend “already granted but deferred variable remuneration,” like shares, awarded in the years up to 2022.
The government said that it would not retroactively ban already paid or immediately payable bonuses for the year 2022.
“The aim of this is also to avoid impacting employees who did not themselves cause the crisis,” it said.
It is highly unusual for a government to impose a halt to bonus payouts, but there has been public backlash against bonus payments at the bank whose rescue was backed by roughly 260 billion Swiss francs ($280 billion) of state funding and guarantees.
Swiss unions earlier on Tuesday had demanded that management bonuses be halted. Bank employee groups have also been angered by potential job losses, demanding special protections.
“It has to be read as recognition that major mistakes have been made at Credit Suisse and it would be so inappropriate if the board received any variable compensation at this time,” said Clive Howard, employment law partner at Keystone Law. The takeover had created angst among staff about their bonuses. It was unclear how many of Credit Suisse’s 50,480 employees would be affected. Credit Suisse declined to comment.
Battered by years of scandals and losses, Credit Suisse for months had been battling a crisis of confidence. Its demise was sealed in a matter of days last week, and Swiss authorities over the weekend brokered a takeover of the bank by its larger rival UBS.
To temper risk-taking after the global financial crisis more than a decade ago, authorities introduced rules to defer compensation and allow for clawbacks for senior employees.
Credit Suisse’s executive board took home 32.2 million Swiss francs in fixed compensation for 2022 but collectively went without a bonus for the first time in more than 15 years.
The bank’s bonus pool shrank by 50% in 2022 to 1 billion Swiss francs, according to its annual report.
The Swiss government also instructed its finance ministry to propose further measures on variable remuneration for Credit Suisse.
Pierre-Yves Maillard, president of the Swiss trades union federation, said managers should not get bonuses as a matter of “decency”.
“We should even ask for them to pay back what they gain those past two years,” he said before the government’s announcement. (Reporting by Noele Illien in Zurich, Stefania Spezzati in London, Cecile Mantovani in Bern, Shubham Kalia in Bengaluru and Tom Sims; Editing by William Maclean, John O’Donnell, Emelia Sithole-Matarise and Tomasz Janowski)
