Credit Suisse Group AG (CSGN), the second- biggest bank in Switzerland, told senior investment bankers that compensation for 2011 will be 30 percent lower on average than the previous year, four people briefed on the discussions said.
For some bankers, including a number in Asia, total pay will only drop by about 20 percent, said one of the people who declined to be identified because they weren’t authorized to speak publicly.
Securities firms are curbing remuneration for investment bankers as the European sovereign debt crisis erodes revenue from dealmaking, and greater regulation limits the profitability of fixed-income trading. Morgan Stanley (MS) is also cutting pay for senior investment bankers and traders by about 20 percent to 30 percent.
Jack Grone, a spokesman for Credit Suisse in New York, declined to comment on the compensation briefings.
The Zurich-based bank also plans to pay a portion of senior employees’ 2011 bonuses in bonds backed by derivatives, repeating a move in 2008 that helped the firm dispose of risky assets while preserving the value for staff, according to a memo obtained by Bloomberg News on Jan. 23.
“We are trying to strike the right balance and align employees with shareholders,” Chief Executive Officer Brady Dougan, 52, said in the memo.
Credit Suisse created the derivative-bond bonuses, which employees will receive as well as cash bonuses and restricted stock. In 2008, during the depths of the U.S. financial crisis, the lender gave employees shares in a $5.05 billion pool of junk-grade corporate loans and bonds backed by commercial mortgages.
By Ambereen Choudhury, Jacqueline Simmons and Zijing Wu
Courtesy of Bloomberg News