Three more days. - On Monday, Credit Suisse's senior bankers and traders in the Americas need to declare whether they will accept the bank's new bonus arrangements. Most appear ready to comply.
'No one is excited about this, but we have no choice really," says one Credit Suisse director in London. "It's take it or leave it. We either accept, or we get no cash at all - and it looks like the proportion of cash this year will be significantly higher than in previous years."
This is the second year in a row that Credit Suisse's senior earners stand to be disappointed. Last year, Credit Suisse cut bonuses for its material risk-takers and controllers by 15%, to an average of CHF627k each. Of this, CHF134k was paid in cash, CHF24k was paid in unrestricted stock, CHF124k was paid in stock vesting over 3-7 years, CHF208k was paid in 'performance shares' with conditions attached, CHF83k was contingent capital, and the last CHF54k was in deferred cash.
This year, Credit Suisse has already told its directors and managing directors that their bonuses will be "significantly" lower. It's also said that it will be paying a far higher proportion of cash - and that, like Jefferies, it will claw this cash back if recipients of the new cash bonuses within a few years of receiving them. Based on last year's Credit Suisse numbers, the implication is that directors and managing directors will receive an average of at least CHF158k in cash, instead of a combination of cash and unvested stock, but the cash number could be as much as 40% of the total. If bankers offered the deal don't sign up, they will simply lose that money altogether.
In an attempt to palliate the pain of the clawback, all Credit Suisse directors and MDs are also getting a new kind of bonus called a 'Strategic Delivery Plan' that comes with unstated performance criteria and won't vest at all until 2025, but this prospect doesn't appear to be improving their mood.
One Credit Suisse said the approach of the deadline for accepting the deal is causing a lot of "noise." - "If you're committed to the bank and the business, I guess it's just something that you need to accept and move on," he reflected. "- It seems to be driven the regulator." Another complained that Credit Suisse's top staff are being held to ransom: "It's like having your entire 2021 compensation subject to your future behavior."
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