London-based bankers employed by Credit Suisse may not receive bonuses due to be issued in 2016. Hundreds of senior staff members at the well-known bank were due to receive deferred payouts in 2016 under a company bonus agreement. They may now have to wait an extra five years to receive the special payouts.
Executives at the bank were informed of the delay to bonus payments last week, an anonymous source claims. The bank has thousands of employees in its London office at Canary Wharf. Bonuses will be paid later than originally planned due to changes to the regulations that govern banker bonuses.
Award payments were reportedly linked to the bank’s credit exposures. They were designed to provide capital relief, as well as risk offset, to the bank. The programme regarding the bonuses was called Partner Asset Facility 2012 and was due to pay out in 2016.
This isn’t the first bonus payment delay for Credit Suisse. The Zurich-based bank has used innovative compensation schemes before in order to reduce risk investments made by staff seeking performance-related payments. Many of its innovations have been copied by other banks aiming to reduce high-risk lending activity.
In 2008, Credit Suisse created a payment scheme that determined staff payouts by looking at the value of an illiquid asset pool owned by the bank. Since the financial crisis of 2008, numerous other banks both within Switzerland and in the UK and US have experimented with Credit Suisse’s performance-based bonus strategies.
The nine-year delay that Credit Suisse bankers face on their bonus payments is far longer than the norm, but experts believe it will play a major role in determining the company’s performance in the coming months. Credit Suisse has confirmed that the leaked memo is accurate but has not commented on the bonus payments delay.
