With the rescue of Credit Suisse by UBS coming with government assistance, Credit Suisse's bonuses have become a public topic. The department of finance has stepped in.
The Federal Department of Finance (FDF) on Tuesday temporarily suspended certain variable compensation paid by Credit Suisse to its employees. This affects compensation already promised but deferred for the financial years up to 2022, including share entitlements.
The Federal Council for its part is refraining from retroactively banning variable compensation to Credit Suisse employees for the 2022 financial year that has already been promised and paid out immediately, for reasons of legal certainty, according to the statement.
Not Punishing the Wrong People
By taking such a step, the federal government said it is important to prevent employees from being punished who did not cause the crisis themselves. The management of Credit Suisse waived variable compensation for the 2022 financial year.
The fact that Credit Suisse intends to continue paying out bonuses, and implementing planned salary despite the takeover and paying salary increases is inflaming public sentiment.
According to calculations by the «Tages-Anzeiger» article (in German, behind paywall), Credit Suisse paid out 32 billion francs ($35 billion) in bonuses since 2013 during a timespan when the bank made losses of 3.2 billion francs.
Plagued by Scandal
That led to public outcry several times in the past, especially since the bank has not only managed poorly in recent years but has also been plagued by a series of self-inflicted scandals. Since its acquisition by UBS, the outrage has grown even louder.
The rescue by UBS is indeed a private-sector takeover, and the Swiss National Bank (SNB) provided liquidity for the seriously troubled Credit Suisse in accordance with its mandate. Nevertheless, the state is assuming various guarantees, so it's hardly surprising political pressure from all sides is increasing because of wage excesses at Credit Suisse.
Inaccurate Federal Councillor
The mood was further inflamed by Federal Councillor Karin Keller-Sutter. When announcing the takeover, she told the media restrictions on bonuses were not possible because it was a private takeover.
The next day the finance minister had to reverse herself. Article 10a of the Banking Act stipulates the Federal Council can order measures in the area of compensation if a systemically important bank receives direct or indirect state aid from federal funds.
Swiss Banking Advice
The Chairman of the Swiss Bankers Association (SBA), Marcel Rohner was blunt in his message on the occasion of the SBA's anniversary. «As the head of a bank that is making a loss, you don't get a bonus.»
That applied to Rohner during his time as head of UBS, and why he was left empty-handed from 2007 to 2009. Rohner, however, declined to comment on the variable salary components for employees below top management.
