Thu, Apr 6th 2023
After two back-to-back days of heated shareholder meetings for UBS and Credit Suisse, the Swiss government stepped in Wednesday evening and canceled CS bonuses for top levels of management.
It has been nearly three weeks since the Swiss government announced that UBS would purchase Credit Suisse (CS) for CHF3 billion in a shotgun merger. Switzerland put up a state guarantee on the merger totaling 260 billion Swiss francs, or about one-third of the country’s GDP. The deal was made secretly over a weekend without consulting investors, clients or shareholders.
In turn, Swiss citizens have turned out in thousands to protest the “monster bank” at Zurich’s Paradeplatz where both banks are headquartered.
On Tuesday, Credit Suisse shareholders demanded answers from the board of directors on everything from share prices to bloated executives’ salaries. Unsurprisingly, shareholders voted down a proposed salary raise for managers. On Wednesday, UBS shareholders echoed their concerns.
One point of contention was the fate of promised bonuses for CS employees. Executives said that pledged bonuses would still be doled out.
By Wednesday evening, the Swiss government announced that all CS bonuses should be canceled, or at the very least reduced by 50% for the top three levels of its management. Moreover, CS must examine whether already paid remuneration can be returned and reported to the authorities.
“Article 10a of the Banking Act stipulates that the Federal Council shall impose remuneration-related measures if a systemically important bank is directly or indirectly granted state aid from federal funds,” according to the government.
In the days before the government made their decision, they froze all bonuses until further notice. The final decision “will affect around 1,000 employees, who will be deprived of approximately CHF50 to CHF60 million Swiss francs with these measures,” the Federal Council said.
The bonuses for the Executive Board have been completely canceled, while those for management level one have been cut by 50%. Managers in the two levels below have had their bonuses cut by 25%.
CS’s top-level executives announced at their annual meeting Tuesday that they were not taking any bonuses. The value of the bonuses had already gone down by about CHF635 million solely due to the drop in the bank’s share price.
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