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Credit Suisse bonuses to include high risk bonds

BANKING giant Credit Suisse plans to pay a portion of senior employees' 2011 bonuses in bonds backed by derivatives, reviving a manoeuvre from 2008 that helped the firm dispose of risky assets while preserving the value for staff.

"We are trying to strike the right balance and align employees with shareholders," CEO Brady Dougan wrote in a memo to staff.

It's "a risk transfer from the firm to employees". Suzanne Fleming, a spokeswoman for Zurich-based Credit Suisse, confirmed the memo's contents and declined to comment further.

Credit Suisse created the derivative-bond bonuses, which employees will receive in addition to cash bonuses and restricted stock, after a drop-off in trading and deal-making in 2011 led the biggest Wall Street firms to rein in compensation.

In 2008, during the depths of the US financial crisis, Credit Suisse gave employees shares in a $5.05bn pool of junk-grade corporate loans and bonds backed by commercial mortgages.

Banks including Goldman Sachs and Morgan Stanley cut bonuses after anxiety about Europe's sovereign-debt crisis helped depress profits and share prices last year.

Morgan Stanley also increased the percentage of 2011 pay packages deferred to future years to 75pc, from 40pc two years ago.

Credit Suisse, Switzerland's second-biggest lender, is among European banks that face pressure from regulators to bolster capital, the cushion of equity between a bank's assets and liabilities that's meant to protect depositors and senior creditors.


Irish Independent