Credit Suisse chairman planning to restructure banker pay

Credit Suisse chairman planning to restructure banker pay
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(Dec 3): Credit Suisse Group AG is reviewing banker pay to better align compensation with shareholder interests after a tumultuous year in which the firm was buffeted by the Archegos Capital Management and Greensill Capital crises.

The Swiss lender should give senior-ranking employees more of their remuneration in shares, with long deferral periods and the ability to take back compensation that’s already been paid out, chairman Antonio Horta-Osorio said at a virtual Financial Times conference late on Thursday (Dec 2). The Zurich-based bank plans to submit the proposed changes in a shareholder meeting in April.

Compensation should include more deferred pay to “make sure the consequences of decisions today” are fully evaluated, he said. Organisations also need the ability “to claw back that remuneration, not as a matter necessarily of guilt but as a matter of accountability.”

Credit Suisse is seeking to move past a turbulent period that saw it lose US$5.5 billion (about RM23.27 billion) in the blow-up of family office Archegos and have to unwind client funds that it managed with Greensill Capital. It presented a revamped strategy last month that included exiting the prime brokerage business and combining its disparate wealth units into a single global business. 

Credit Suisse was little changed at about 8.90 Swiss francs (US$9.70 or about RM40.95) as of 11am in Zurich after earlier gaining as much as 1.9%.

The new pay structure would take into consideration the cost of capital, and measure staff across the bank on risk-management metrics, according to Horta-Osorio, who succeeded Urs Rohner as the chairman in April. 

“I do think that people in general, either in sports or in banking or any other field, should be paid according to their performance and market conditions,” he said.

In the aftermath of the Archegos scandal, the bank ousted nine executives and recouped about US$70 million in pay, including bonus clawbacks, as it punished 23 people in all for the events that shook the bank. 

At the same time, it began offering selective retention payments to some senior investment bankers in efforts to stem an exodus of talent. More than 50 rainmakers have defected to competitors over the last nine months, complicating the Swiss bank’s ability to compete in a hot talent war across Wall Street. 

Credit Suisse also offered mid-year salary increases to some of its top private bankers, in some cases by as much as 20% for high-ranking employees, people familiar with the increases told Bloomberg earlier. 

US banks and European rivals have been raising pay for junior employees and adding perks, such as more flexible work options, to attract skilled employees amid discontent of being overworked and the risk of burnout. 

The bank also plans to share additional performance indicators with investors, including net new money in investment management, in its full-year results in February, Horta-Osorio said.