There is disgruntlement at Credit Suisse. It's not only that Credit Suisse bonuses were down for last year, while bonuses elsewhere were up. Nor is it just that directors and managing directors at Credit Suisse have been paid cash bonuses that are repayable, plus tens of thousands of $$ in tax (which they have to find from their own pockets) if they leave within three years. It's also that a large percentage of bonuses paid in previous years has been clawed back.
When Credit Suisse published its compensation report earlier this month, it said that CHF68m of previous years' bonuses were being clawed back as a result of last year's loss in the investment bank. However, Credit Suisse insiders say the extent of the clawback only became apparent this week.
"Two weeks ago, we thought the clawback was being waived," says one managing director (MD). "Now we find that it's being enforced on performance shares paid to managing directors and material risk takers."
Credit Suisse declined to comment on the claims. It's understood that the clawbacks apply to Performance Share Awards (PSAs) paid in the past three years, including shares that vested in February 2022. Insiders claim the clawbacks have been skewed towards people employed by what was formerly known as Credit Suisse's global markets (ie. sales and trading) business, while its investment bankers appear to have been comparatively protected.
"It's causing a lot of anger," says the trading MD. "It seems that people who used to be in the Investment Banking and Capital Markets Division have been protected from this and that we're being discriminated against. Some people are even talking about launching a class action lawsuit against the bank. A 34% clawback is a step too far, and a lot of people are in discussions to leave."
As we reported last week, some Credit Suisse traders have left already. However, the bank is also busy building out its investment banking business. Business Insider noted recently that the bank has rehired 14 MDs in the past year.
Credit Suisse's compensation report states that the bank will start clawing back previous year's bonuses if the bank makes a loss of more than CHF1bn. If the loss hits between CHF2bn and CHF3bn, between 30% and 45% of previous years' bonuses will be reclaimed. At CHF4bn, 60% is reclaimed. The bank as a whole made a loss of CHF1.6bn last year. However, the investment bank made a loss of CHF3.7bn, which suggests Credit Suisse may in fact be being lenient with its traders.
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