The Swiss Times - Swiss News in English

CS employees sue for revoked bonuses

  • By The Swiss Times
  • 2 June 2023
After the Swiss government revoked bonuses for Credit Suisse’s upper management following the near collapse of the bank, CS employees say they want them back.
CS employees sue for revoked bonuses
Protestors in front of Credit Suisse headquarters in Zurich (Keystone SDA).

(KEYSTONE SDA) A number of CS management employees are taking legal action against the cancellation of bonus payments in the millions as part of the CS emergency rescue. 

By the end of May, the Federal Administrative Court (BVGer) received three complaints on behalf of around 50 complainants against the corresponding FINMA order, as a spokesman for the court explained when asked by the AWP news agency.

The Federal Administrative Court could not provide any further information, for example on the sums involved, the spokesman said on Wednesday. In the past week, various media reported that several law firms were asked by CS managers to take legal action on their behalf against the cancellation of the so-called Contingent Capital Awards (CCA).

CS employees sue for revoked bonuses
Protesters gathered in front of Credit Suisse’s headquarters to protest the merger last (Keystone SDA).
No complaint from CS

On March 19, as part of the emergency takeover by UBS, the financial market supervisory authority FINMA instructed CS to declare all additional tier 1 capital instruments (AT1) and also the contingent capital awards linked to AT1 instruments as worthless. According to the latest CS annual report, CCAs worth CHF 360 million were outstanding at the end of 2022.

Credit Suisse initially took the position that the CCA were not affected by the measure. However, in another ruling dated March 22, FINMA rejected CS’s view and explicitly stated that its ruling to write off the AT1 instruments also included the CCA.

The big bank then turned to the Federal Administrative Court with a request for precautionary legal protection. The court accepted the request, but made it a condition that an appeal be lodged against the FINMA ruling. However, on May 9, CS informed the court that it had decided not to appeal, and the Federal Administrative Court dismissed the case.

CS employees sue for revoked bonuses
Credit Suisse at the bank’s headquarters at Paradeplatz in Zurich (Keystone SDA).
2021: More than 5000 employees

Deferred compensation in the form of contingent capital awards has been offered by CS to executive and director level employees since 2014. However, CS did not use this instrument in the 2022 financial year. In 2021, almost 5,100 employees had received such CCAs.

The declaration of the AT1 instruments as worthless by FINMA as part of the CS emergency rescue also caused a great international sensation and led to numerous complaints from owners of AT1 bonds. The spokesman for the Federal Administrative Court put the number of complaints received by the end of May at around 250 on Wednesday, which were submitted on behalf of a total of 2,500 complainants.

The complainants take the position that the write-off of the bonds was not necessary because CS met the regulatory capital requirements at all times.

This article was reprinted with permission from Keystone SDA.

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