The Swiss government has cut bonuses for about 1,000 senior bankers at Credit Suisse, with the executive team losing their outstanding variable pay entirely, after the lender’s rescue by its rival UBS last month.
Following a meeting on Wednesday, the federal council, Switzerland’s executive body, called on the finance ministry to cut bonuses at Credit Suisse worth up to a total of SFr60mn ($66.1mn).
The bank has also been ordered to consider whether bonuses that have been paid out can be recouped, and to report to the finance ministry and Finma, the financial regulator, on its efforts.
The ruling comes a day after the Credit Suisse board was confronted by angry investors at its first in-person annual general meeting in four years — and its final one as an independent company.
Shareholders voted against a pay proposal for the executive team, which the board said it would take into consideration, though all members of the board were narrowly re-elected.
Public anger over bankers’ bonuses has remained high in Switzerland since the 2008 financial crisis.
The day after UBS agreed to buy Credit Suisse in a $3.25bn takeover last month, protesters gathered in front of Credit Suisse’s headquarters over the proposed use of public money in the rescue deal.
Bern has written a SFr9bn guarantee to UBS to support its digestion of its rival, and authorised a SFr100bn liquidity support facility from the Swiss National Bank.
The government said that under article 10a of the Swiss banking act it had the power to impose pay-related measures if a systemically important bank was directly or indirectly granted state aid from federal funds.
Under the terms of the ruling, members of the Credit Suisse executive board will have their bonuses cancelled, while staff one level below will suffer a 50 per cent cut. Staff a level below that will receive a 25 per cent reduction in their bonuses.
“This differentiated approach takes account of the most senior managers’ responsibility for the situation at Credit Suisse,” the federal council said in a statement.
All bonuses accruing for all the three senior management levels before the takeover by UBS is completed in the coming months will also be cancelled.
The government had temporarily suspended bonuses for Credit Suisse executives on March 21 but the federal council has now decided to put these measures in place.
The total deferred bonus pool for all 49,000 Credit Suisse employees is SFr653mn, based on the share price of SFr0.76. When the bonuses were awarded they were worth SFr2.76bn.
“In other words, all employees have already had to bear a total loss of more than SFr2bn due to the drop in Credit Suisse’s share price,” the federal council said.
Credit Suisse shares had dropped more than 90 per cent over the past two years. The bank declined to comment.