Credit Suisse president pledges to overhaul bankers’ wages

Credit Suisse president António Horta-Osório has announced it will overhaul the bank’s pay policy after a series of successive crises infuriated investors and sent its share price plummeting.

The bank will present a new pay policy at its annual general meeting in April, with the aim of designing a cultural shift to make employees more accountable for risk management decisions. NS.

Speaking at the FT’s Global Banking Summit on Thursday, Horta-Osório said the new pay structure would include incentives based on risk management metrics and “taking into account the cost of capital, connect managers throughout the bank with shareholders more”.

The Portuguese-British banker also said he favors greater use of long-term incentives, especially for senior managers, as well as the withdrawal of delivered and unpaid bonuses. invest to improve accountability.

“Those things are more important than, in absolute terms, whether the pay is too high or too low,” he said. “Remuneration must be relevant to the industry and in line with the interests of shareholders, creating value after deducting cost.”

The pledge from Credit Suisse’s new chair comes as the bank is battling to repair the damage caused by the collapse of professional finance firm Greensill Capital in early March, which has held 10 billion dollars in Swiss bank client funds. Just weeks later, the bank suffered a $5.5 billion transaction loss – the largest in the bank’s 165-year history – following the collapse of the Archegos Capital family office.

Joining Credit Suisse shortly after, Horta-Osório promised to reshuffle the group. But his new strategy for the bank, unveiled last month alongside chief executive Thomas Gottstein, has overwhelmed investors, with shares falling 5% following the presentation.

The bank’s shares have fallen more than 30% since Greensill’s demise, leaving its market capitalization at $23.4 billion – less than half that of fierce rival UBS.

ONE damn report by the law firm Paul Weiss in the fall of Archegos found that the trading losses were the result of a “fundamental failure of management and control” in Credit Suisse’s investment banking and a “lack of attitude.” cautious about the risk”.

In response, the lender reclaimed $70 million in wages and bonuses from the 23 most at fault individuals, including nine laid-off employees.

However, as Credit Suisse reels from a dual meltdown, it also has to offer a retention bonus to senior executives and team leaders over the summer to exit investment banking.

Meanwhile, a report on Credit Suisse’s failure to Greensill by Swiss law firm Walder Wyss and Deloitte has been denied. series of delays and likely won’t be completed before the bank’s full-year results in February, according to people familiar with the matter.

The board has yet to decide whether to release the full report, which is expected to highlight some of the cultural and risk management deficiencies identified by the Archegos investigation, or to release the summary. turn off your detections.

According to people familiar with the matter, one of the main findings of the investigation so far is that Credit Suisse employees didn’t pay enough attention to what Greensill funds invested in and were too trusting in what Greensill funds invested in. supply chain finance company.

So far, the bank has recovered just over 70% of its $10 billion invested in the fund. Restoring the rest is expected to take years.

In October, Credit Suisse provided stuck investors with brokerage fee refunds, discretionary authorization and banking services, as well as investment advice. Just under half of 1,000 investors have signed up for the program, known internally as Project Sunflower, according to people familiar with the matter.

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