GENEVA (AP) — The Swiss government says it's ordered cuts to the bonuses of top executives of Credit Suisse, with nearly 1,000 managers being “deprived” of tens of millions combined as the troubled bank heads toward a forced merger with rival UBS.
The Federal Council, a seven-member panel that runs Switzerland's executive branch, announced Wednesday that it has instructed the Finance Department to cancel altogether or reduce by either one-half or one-quarter such bonuses due last year among the top three rungs of management.
That will amount to a loss of bonus pay totaling about 50 million to 60 million Swiss francs ($55 million to $66 million).
The move comes after Swiss authorities scrambled in mid-March to cobble together a 3 billion Swiss franc ($3.25 billion) sale to UBS of Credit Suisse, which suffered surging outflows of deposits and a plunge in its share price.
Two days after the deal was announced, the government said it was temporarily suspending bonus payouts to Credit Suisse employees.
Bonuses for top Credit Suisse managers also are set to be canceled or reduced this year. UBS executives hope to close the takeover deal in the coming months.
The rescue capped years of trouble at Credit Suisse — among 30 banks worldwide considered “systemically important” — after fears that it could fail and trigger an international financial crisis after the collapse of two U.S. banks.
In an indication of why not all bank employees were affected by the bonus changes, the Swiss executive branch said total deferred variable compensation, such as share awards, of Credit Suisse's 49,000 employees has sunk to 635 million francs ($700 million) — to about one-fourth of their total worth when initially awarded.
“In other words, all employees have already had to bear a total loss of more than 2 billion francs due to the drop in Credit Suisse’s share price,” it said.
The announcement comes a day after shareholders criticized Credit Suisse leaders, who apologized for failures of the 167-year-old lender. On Wednesday, UBS held its own annual shareholder meeting, where its chairman expressed confidence in the deal while still noting “huge" risks.