The bonus stop is intended as a measure against excessive manager salaries. But the base could also be affected.
The Federal Council prohibits Credit Suisse from paying out outstanding bonuses. He announced that yesterday. The state government apparently wants to refrain from sending the fatal signal that a company can claim state benefits and at the same time be allowed to pay out bonuses. But the bonus no from Bern also raises questions.
The Federal Council has indicated that it will only prohibit certain payments. Where money has already flowed, he does not want to intervene – out of concern that this would be perceived as a breach of legal certainty. So there are still guaranteed or deferred payments.
Swiss employees could get nothing
It is above all high-paying stock options for top managers that one wants to prevent. These are entitlements to CS shares that have accumulated over the past few years. But as SRF business editor Charlotte Jaquemart explains, there are still more payments to be made. While Credit Suisse has already paid out its cash bonuses for 2022 globally, this is not the case in Switzerland.
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Many Credit Suisse employees in Switzerland worry that their outstanding bonuses will not be paid out.
KEYSTONE/Ennio Leanza
“If employees at the counter or in payment transactions in this country get nothing, they would be punished for the mistakes of management,” says Jacquemart. Unlike in many other industries, the bonus in the banking industry is commonplace. There is often no 13th monthly salary.
As reported by the Bloomberg news agency, CS has assured employees in an internal memo that bonuses and salary increases that have not yet been paid will be paid as planned. But there is concern in the banking center that politicians will also suspend these payments under pressure from the population.
Has the bonus ended?
Credit Suisse has accumulated debts of three billion francs over the past ten years, but has paid out bonuses of CHF 32 billion to its top managers over the same period. The former CS board president Urs Rohner alone earned over 40 million francs in bonus payments during his ten-year tenure.
The high variable salary components probably contributed to the decline of CS, as Charlotte Jacquemart explains: “Research has long shown that high bonuses create the wrong incentives. You then take too many risks.”
It is now up to politicians to change the system. Bonus payments could be completely banned in the future. Or, as has happened in the UK, bank managers could be held more accountable. At least the current CS leadership seems to show insight: They waived their bonus payments for the past year.
The federal government bases the bonus ban on the Banking Act. Article 10a states that variable compensation that is, or should be, dependent on performance may be removed in whole or in part where a systemically important bank receives direct or indirect government assistance from federal funds. This is the case with the CS. And since UBS now also has a de facto state guarantee, this also applies to them. So there could also be bonus cancellations at the new mega bank.
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KEYSTONE/Michael Buholzer
The major bank Credit Suisse is taken over by UBS. The newest You can find developments relating to CS and the current banking crisis in Switzerland as well as reactions and assessments here.