Credit Suisse Hikes Cash Bonuses For Top Bankers After Disastrous 2021

For the last few weeks, the financial press has been replete with headlines about bankers getting generous raises. From JPM CEO Jamie Dimon – who was paid a new record annual sum close to $35 million – on down to the rest of the front office.

Well, just weeks after firing its chairman of just 8 months for daring to attend Wimbledon in defiance of the bank’s COVID rules (among other misgivings), the bankers at Credit Suisse are learning that they, too, will be treated to an even larger bonus than they might have anticipated, despite 2021 being one of the bank’s most disastrous years in recent memory.

According to Reuters, Credit Suisse is lifting cash payouts for senior bankers (MDs and up, it looks like). The bank reportedly broke the news to employees on Friday.

But after the year Credit Suisse just had, management is arguing that the bonuses are necessary to retain top earners. Otherwise, the bank would be in even bigger trouble.

For bankers who accept the increased pay, there’s a catch: 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.

Shares of the bank lost more than 25% of their value last year. As a result, bankers will be getting an even larger cash helping and a smaller potion of their comp in short-term equity incentives that vest after a year.

Banker pay rose across the industry in 2021 amid a boom in M&A activity thanks in large part to the SPAC bonanaza.

Starting early in the year, Credit Suisse brooked billions in losses in 2021 from its prime brokerage business thanks to the collapse of Archegos, as well as its asset management business, where the collapse of Australian “supply chain finance” firm Greensill led CS to freeze $10 billion in client funds which essentially became worthless.

Given all this, it’s hardly surprising that Credit Suisse chose to emphasize “accountability and responsibility” in a statement about the bonuses.

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.”

Meanwhile, the bank warned shareholders on Tuesday to expect a loss in Q4 dues to mounting legal costs and lower revenues in its trading and wealth management businesses.