Credit Suisse Group AG has notified its staff that the deferred bonuses designed to imitate the value of bonds that were eliminated in the company’s urgent sale to UBS Group AG will also be reduced to zero.
Over the past few years, numerous managing directors and directors at Credit Suisse have been given some proportion of their bonus in the form of contingent capital units. In 2021, this practice was extended to just over 5,000 employees.
However, the new decision is said to eliminate the contingent capital awards that were valued at 360 million Swiss francs ($403 million) at the conclusion of 2022. This exacerbates the financial difficulties of senior bankers, who have already experienced a decline in the value of share awards and the reduction or annulment of some bonuses due to government regulations.
One of the requirements of the CCAs is that they have no value if the bank fails. However, the way the rescue was executed, framed as a private acquisition, caused some employees to speculate whether it was possible that the agreement would not activate this condition.
Recently, the Swiss government decreed that the executive board of Credit Suisse and top managers one or two levels below them would have their remaining bonuses either revoked or reduced by up to 50 per cent. This was in addition to the loss in value of employee awards of over 2 billion Swiss francs resulting from the decline in stocks.
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