Credit Suisse will cut its 2009 bonus budget by 5 per cent to spread the cost of Britain’s 50 per cent bonus tax across the business.
But senior bankers in the UK will be hit with the biggest reductions, with 400 managing directors told that the amount of money put aside to pay their bonuses would be reduced by a further 30 per cent.
Switzerland’s biggest bank, which employs about 47,400 people around the world, had SwFr12.5 billion in its compensation pool at the end of the third quarter, compared with SwFr13.3 billion for the full year in 2008.
Although Credit Suisse did not receive a bailout from the Swiss Government during the financial crisis, it has made a number of changes to its pay practices. In December 2008 the bank said that it would link the deferred equity portion of the bonuses of about 2,000 of its investment bankers to the performance of a $5 billion pool of illiquid assets such as mortgage-backed securities.
In October last year Credit Suisse said that it would more closely link the cash and deferred-equity portions of workers’ bonuses to the bank’s return on equity rather than its share price, and introduce minimum stockholding requirements for its most senior employees.
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In December the UK introduced a one-off 50 per cent tax on bonuses above £25,000, leaving banks to decide whether to reduce their compensation pools in order to pay the tax or to force shareholders to cover the cost.
JPMorgan Chase, announcing its fourth-quarter and full-year results last Friday, said that its bonus allocation had been cut by “several hundred million dollars” as a result of the UK tax.
The bank said today: “Credit Suisse aims to align its compensation policies with the interests of our stakeholders, including regulators, shareholders and employees. In this environment, we felt that reducing bonuses was the responsible and appropriate action to take.”