More Compensation Changes for Credit Suisse Bankers

Bankers Bonus
Bankers Bonus

Credit Suisse announced this morning that more of its bankers will be paid using deferred bonuses—essentially paying bonuses in stock rather than cash.

Prior to two years ago, deferred bonuses were paid only to bankers earning more than $125,000 in bonus compensation; that threshold was then lowered to 50,000 Swiss francs- or a little over $50,000 U.S. Now, 35 to 70 percent of bonuses will be paid in deferred compensation- compared to 15 to 60 percent from earlier years.

The story comes from Julia Werdigier, reporting in the New York Times blog DealBook. According to the Times:

"The new rules would create 'greater transparency for all stakeholders' and reflect 'the bank's commitment to rewarding its employees for performing in a way that creates sustainable value for the bank and its shareholders,' Credit Suisse said in a statement.

Credit Suisse has its investment banking practice headquartered in London, where political pressure seems to be mounting on banks with regard to compensation.

Also from The Times:

"Prime Minister David Cameron of Britain said in an interview with the BBC on Sunday that banks 'should pay smaller bonuses' and be more 'socially responsible.'

It's difficult to gauge the precise impact of this breaking news. It seems reasonable, however, to say that Credit Suisse's investment banking practice does not exist in a vacuum. Lowering the thresholds of deferred compensation, and increasing deferred compensation percentages, will likely alter the political and economic landscape of London based investment banking to some greater or lesser extent.

Whether investment bankers will flee Credit Suisse in droves—or whether other investment banks will feel pressure to enact similar measures— remains to be seen.

Perhaps the larger question will be whether The City can remain a competitive location for investment banking operations to be headquartered in light of such political pressures


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