The Swiss government has ordered Credit Suisse to cut bonuses of nearly 1,000 senior bankers, with the top executive level losing its variable pay completely, as the embattled bank gears up for a forced merger with its rival UBS, the Financial Times and Reuters reported Wednesday.
After a meeting Wednesday, the federal council, a seven-member panel that governs Switzerland’s executive arm, instructed the finance department to cut bonuses at Credit Suisse and direct the bank to retrieve bonuses that have already been paid.
The move "will affect around 1,000 employees, who will be deprived of approximately 50-60 million Swiss francs with these measures," the council said, according to Reuters. In U.S. currency, that’s roughly $66 million.
Wednesday’s ruling takes a tiered approach to bonus cuts. Bonuses for Credit Suisse executive board members will be canceled, while employees one level below will have a 50% bonus cut. Staff a further level down will get 25% cuts 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, according to the Financial Times.
The bank’s top executives announced last month they were forgoing their bonuses for 2022.
Meanwhile, the 2022 bonus pool for Credit Suisse’s nearly 50,000 employees sank to 653 million Swiss francs from 2.76 billion Swiss francs because of a precipitous drop in share prices.
“In other words, all employees have already had to bear a total loss of more than [2 billion Swiss francs],” the federal council said, according to the Financial Times.
The council told Credit Suisse to report the outcome of its clawback attempts to the finance ministry and Finma, the Swiss financial regulator.
The bonus cuts come a day after Credit Suisse board members faced roughly 1,750 angry investors at its first in-person annual general meeting in four years — and its last as an independent company.
“What has happened over the past few weeks will continue to affect me personally and many others for a long time to come,” CEO Ulrich Körner said Tuesday, according to CNBC. “We ran out of time.”
At the meeting, Credit Suisse Chair Axel Lehmann, was re-elected, with 55.67% approval, according to Reuters.
Five of the bank’s other board members stepped down before the vote, and six were narrowly re-elected Tuesday.
However, shareholders voted against approving compensation for the executive team, according to the Financial Times.
Credit Suisse declined to comment to the outlet.
The bank’s acquirer, UBS, held its own annual shareholder meeting Wednesday, where executives tried to assuage investor angst.
“I can understand why people are bewildered, even angry,” said Lukas Gähwiler, UBS’s vice chair, according to the Financial Times. “We had only 48 hours to conduct our due diligence, so many questions thus remain unanswered. ... This is a Herculean task.”
