The Swiss Times - Swiss News in English

CS execs given ‘hundreds of millions of francs’ in bonuses

  • By The Swiss Times
  • 8 May 2023
In the years leading up to Credit Suisse’s near-collapse, hundreds of millions of Swiss francs were doled out to executives and sometimes secretly, a local newspaper reveals.
CS execs given ‘hundreds of millions of francs’ in bonuses
At Credit Suisse’s last annual shareholder meeting in April a man wears a suit jacket reading “Liquidate Criminal Suisse + Bankster Assets” (Keystone SDA).

In the years leading up to Credit Suisse’s 2023 near-collapse, CS executives were given hundreds of millions of Swiss francs in bonuses – and some of which were kept secret from shareholders, according to an investigation by local Swiss newspaper SonntagsZeitung.

Bonuses are on the chopping block

In March, the Swiss government announced the shotgun merger of Switzerland’s two biggest banks, UBS and Credit Suisse. Under the deal, UBS purchased CS for CHF3 billion. In the weeks following the announcement, thousands of Swiss people protested in the streets, politicians called for the merger to be undone and CS shareholders demanded executives return their bonuses.

Former CS chairman Urs Rohner said that he would not return any of the CHF52 million he earned while working at the failed bank.

The Swiss government responded by announcing that all CS bonuses should be canceled, or at the very least reduced by 50% for the top three levels of its management. The Swiss government is trying to ban “too-to-big-to-fail” banks from handing out excessive bonuses to top executives and risk managers; which is in line with what CS shareholders voted for at the bank’s last annual shareholder meeting in April.

Not all bonuses were made public to shareholders either, SZ reported.

CS execs given ‘hundreds of millions of francs’ in bonuses
Credit Suisse headquarters (for now) at Paradeplatz in Zurich (Keystone SDA).
CS: A history of rewarding bad behavior

In researching bonuses at CS, journalists found at least seven former CS executives who padded their bank accounts handsomely in the years just preceding the bank’s downfall.

In 2019 alone, top managers received CHF100 million; despite 2019 being a year fraught with an embarrassing scandal for bank executives.

The scandal in question began at a New Year’s Eve party held at former CS CEO Tidjane Thiam’s home in a wealthy Zurich suburb. One of the guests, the bank’s then-wealth management chief Iqbal Khan, remarked on Thiam’s garden, which “set off a bitter feud between the two alpha males.” Khan, who was also Thiam’s neighbor, had some concerns about his trees.

The feud was never resolved and Khan left CS seven months later for a position at UBS. At some point around Khan’s departure, Thiam and others at CS allegedly began spying on Khan to, they say, prevent him from poaching private bankers to UBS. Khan reported to authorities that he believed he was being spied on after three men chased him and his wife through the streets of Zurich by car and on foot.

An investigation ensued that appeared to clear Thiam’s name, but the soap opera of events ended in him stepping down from his CEO position at the beginning of 2020. Moreover, Thiam’s top lieutenant and the bank’s head of security were fired; and, a consultant involved with the espionage took his own life.

As a reward for muddying the CS name? Thiam received 10.7 million francs in salary and bonuses for 2019, according to the Wall Street Journal.

CS executives in other years were given up to CHF30 million in bonuses that were kept secret from CS shareholders, SZ reports. Some of these bonuses were a direct result of profit-sharing deals approved by former CS CEO Brady Dougan, according to SZ. CS reportedly doled out a CHF71 million bonus to Dougan just after the 2008 global recession sent CS shares nosediving. Dougan left CS in 2015.

CS execs given ‘hundreds of millions of francs’ in bonuses
Former Credit Suisse Chairman Axel Lehmann at the shareholder meeting in April (Keystone SDA).
Will it continue?

As newly-minted UBS CEO Sergio Ermotti attempts to merge the two banks with very different cultures, he has shortlisted CS executives who are most likely to remain in the executive team, according to Reuters. At the top of the list are CFO Dixit Joshi, COO Francesca McDonagh and head of Swiss business André Helfenstein.

UBS is also considering keeping CS’s investment banking business operations and selling the rest in an initial public offering.

This article may be freely shared and re-printed, provided that it prominently links back to the original article.

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