London January 18 2023: Credit Suisse Group AG will pay its senior bankers an upfront cash award again this year, as executives attempt to incentivize staff to stick with the troubled lender as it undergoes a broad restructuring.
Managing directors and directors in most locations will be paid the cash component of their variable 2022 compensation straight away, according to an internal memo obtained by Bloomberg. Recipients would need to repay the funds proportionally should they leave the bank within three years, according to the memo. The deadline to sign up for the upfront payment is Jan. 30.
The Swiss lender is set to post another annual loss for 2022, a year which Chairman Axel Lehmann described this week as “horrifying” after billions of dollars in client outflows. The performance has staff bracing for a decline in the total bonus pot of about 50%, Bloomberg reported earlier this month.
A spokesman for Credit Suisse declined to comment on the payments.
“Our compensation pool will be lower than in previous years,” the Executive Board said in the memo. The upfront cash award “allows the bank to recognize the contribution of its senior leaders and to reward loyalty.”
For 2021, the upfront awards were some 40% of the regular bonus pool, as the bank tried to incentivize key staff amid an earlier, ultimately unsuccessful effort to restructure. Credit Suisse also gave some senior staff a special long-term award, and has made retention payments to try to hold on to key employees. Last year the bank was forced to raise some $4 billion in capital and saw its share price slump to record lows.
Efforts to retain staff via such upfront cash awards didn’t stop a string of departures. High-profile bankers, particularly in Asia, left anyway for competitors including UBS Group AG, frustrated by a series of scandals that rocked the bank in recent years.
Bonus outcomes for 2022 are likely to diverge widely, given that the bank will have to balance poor performance in some units with the need to motivate staff in others. The memo didn’t specify the total amount of the bonus pool or the scale of the upfront payments.
“Our compensation structure for 2022 aims to strike the right balance between the interests of our employees and those of key stakeholders, including our shareholders and regulators,” the Executive Board said.
Credit Suisse has said that the group is set to report a loss of up to 1.5 billion francs for the final three months of last year, partly on the back of historic outflows of client funds. The lender is due to report on progress in regaining those clients when it discloses fourth-quarter earnings. It has reported a loss in each of the previous three quarters.