Credit Suisse’s bonus fund slumped 32 percent in 2021 after losses incurred by the lender, paradoxically reflected in payouts to top managers. Management against the backdrop of the company’s losses received solid bonuses, according to Archyde.com.
The bank reduced the amount of the bonus fund to 2 billion Swiss francs (about $2.2 billion), having lost 1.6 billion francs (about $1.7 billion) in 2021. The results of the financial organization were affected by high costs of litigation and unsuccessful investments of the investment unit.
Thus, the Swiss prosecutor’s office is seeking to recover more than 42 million francs ($45.4 million) from the bank due to the fact that Credit Suisse failed to prevent the laundering of funds by Bulgarian drug traffickers. The bank could also be fined up to 5 million francs ($5.4 million).
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Credit Suisse is also shaken by internal scandals – the chairman of the board did not comply with coronavirus safety measures. As a result, after an internal investigation, he was forced to step down from his post in early February.
The situation with the bank led to significant fall its market value to $21.7 billion. On the morning of February 11, the stock traded at $9.08, down 53 percent from a year earlier.
Despite this, the bank’s top managers received 799 million francs (863 million US dollars) in upfront cash bonuses for 2021. In 2020, payments amounted to 59 million francs. The bank itself explained this growth by changing the share of payments in the form of money and shares. Now the top management of the bank will receive more cash and fewer shares that can be sold in a year.
Also, Credit Suisse management will receive 497 million Swiss francs ($537 million) in the form of a one-time bonus in the form of shares if the company achieves financial goals within three years.
Bonuses in Credit Suisse consist of three parts – a cash bonus at the end of the year, a reward in the form of shares that can be sold in a year, and a deferred bonus in the form of shares that the employee is free to sell only after a few years.
In 2022, the bank plans to spend even more funds on employee incentives. Credit Suisse says the bank needs to remain competitive on payroll in order to retain and attract talent. However, the financial institution has not become the only one spending more and more money on bonuses. At the end of 2021, the top management of European banks got record payments in six years.