Credit Suisse Group is lowering its 2021 bonus pool by around 10% after facing pushback from Swiss regulators on higher pay, Bloomberg reported citing people with knowledge of the development.
Financial Market Supervisory Authority (Finma) asked the company to cut its planned bonus pool following steep losses incurred by the firm owing to a series of crisis, according to unidentified sources.
The development comes after Credit Suisse announced a new bonus structure last month, which included clawback provisions intended to retain its staffs.
The new overall bonus number may vary slightly while individual pay will depend on the business unit, they said.
Credit Suisse and Finma did not comment on the news.
Credit Suisse, which is suffering losses from Archegos and Greensill scandals, is forced to satisfy the regulator while struggling to retain its staff as rivals such as JPMorgan and Goldman Sachs raise their pay.
Under its new bonus structure, Credit Suisse said its employees earning $250,000 or more annually will receive a sizeable part of their variable compensation in upfront cash with a condition to pay back a pro-rata portion if they leave the firm within three years.
According to sources, such payments can be booked as loans and were considered ‘a more palatable solution’ for the regulator.
This week, Reuters reported that a Swiss court is pressing money laundering charges against Credit Suisse in the trial of an alleged Bulgarian cocaine trafficking gang.
Swiss prosecutors said that the bank and its previous relationship managers failed to stop the drug traffickers from hiding and laundering millions of euros during the period between 2004 and 2008.
However, Credit Suisse rejected the allegations and said it would ‘defend itself vigorously in court’.
The firm was also recently hit with a $9m penalty by the US regulators for several operational failures, such as not revealing conflicts of interest in research reports.