Dive Brief:
- Swiss bank Credit Suisse’s top executives will not receive bonuses for 2022, but together with approximately 500 senior managers will instead split a 350 million Swiss francs ($380 million USD at the time of reporting) long-term incentive award payable if the institution’s restructuring plan proves a success, according to reports.
- The long-term incentive plan follows dismal earnings for the second-largest Swiss bank, with Credit Suisse reporting a loss for the second consecutive year. The bank reported a 7.3 billion Swiss francs net loss for 2022, according to its earnings results published Thursday.
- Credit Suisse also slashed its bonus pool for its bankers, CFO Dixit Joshi said Thursday during the bank’s earnings call, with the bank’s total variable compensation pool 50% lower than 2021 “as we took actions commensurate with the decline in the group performance,” he said.
Dive Insight:
The 2022 long-term incentive plan for its executives and the top 1% of staff follows a similar move in 2021 to incentivize leadership to stay with the beleaguered bank, when it granted top staff 497 million Swiss francs in one-time share awards tied to its performance, according to a Wednesday report by Bloomberg.
Credit Suisse detailed its restructuring plans in October 2022 as it attempted to fend off numerous challenges, including economic pressures and a large-scale client exodus which continued well into 2022. Asset outflows reached approximately 110.5 billion Swiss francs by the end of its fourth quarter, according to the bank’s earnings results.
Approximately two-thirds of net asset outflows for the bank’s fourth quarter occurred in October, Joshi said during the bank’s earnings call, and “reduced considerably in November and December,” he said.
With the restructuring plan, Credit Suisse aims to refocus on wealth management and Swiss banking, according to the 2022 strategy update it released in October. The plan also includes the spinoff of its investment banking division, with the restructuring funded in part by a $4 billion USD capital increase led by Saudi National Bank, according to reports.
Credit Suisse is also taking steps to reduce its headcount as part of the restructuring plan, aiming to cut approximately 9,000 employees by the end of 2025. The bank has achieved about a 4% reduction in headcount since the end of September, Joshi said Thursday.
Credit Suisse’s fourth quarter performance “reflects the decisive actions we have taken against a difficult market backdrop,” Joshi said on the earnings call. “Looking forward, we expect that the strategic actions taken to reduce the group's risk profile and the challenging market conditions will continue to be reflected in our financial results.”
Joshi expects the bank to report a loss in 2023, he said, given factors including costs relating to its restructuring plans, he said.
Bank CEO Ulrich Korner, who took the role last summer after the immediate resignation of previous CEO Thomas Gottstein, said Thursday during the earning’s call that 2022 was an “extremely challenging year for Credit Suisse.”
“Nonetheless, it was also a year which marked the beginning of the important and necessary transformation for our organization,” he said.
Korner and Joshi were both appointed to their respective positions at Credit Suisse in 2022 as part of a shakeup of its executive suite. Joshi, a previous Credit Suisse alum, rejoined the Swiss bank as its CFO effective Oct. 1, amid a series of executive changes, with the bank also announcing the appointment of a new chief operating officer and new CEOs for Europe and its asset management division.
Credit Suisse did not respond to requests for comment.
