Hundreds of bankers are facing repayment demands from UBS. CS paid around 1.2 billion francs in advance.
Zurich. The major Swiss bank UBS is demanding back hundreds of millions in bonus payments that Credit Suisse (CS) paid before its demise in order to persuade top bankers to stay. According to insiders, the bank contacted several hundred bankers to get back part of the 1.2 billion francs, which were known internally as Upfront Cash Awards.
Some bankers were offered multi-year repayment installments, the insiders’ reports and confidential documents seen by Bloomberg show. The amount that UBS is demanding back amounts to less than 651 million francs, it is said.
Considerable dimension
The bank’s lawyers are contacting employees who left the company of their own accord and threatening legal action if the amounts demanded are not paid, the documents show. A UBS spokeswoman has so far declined to comment to Bloomberg. Clawing back bonuses upon departure — a measure known as “clawback” — is not uncommon at major banks. But the dimensions and circumstances at CS are extraordinary.
The bank gave conditional cash bonuses to thousands of bankers at the rank of managing director or director in early 2022 and this year to cushion the shrinkage of the bonus pool. After that, the bank experienced a flood of departures. Deferred bonuses are usually granted in the form of restricted shares, which the bank can simply cancel. However, in order to retain top talent during the crisis and despite a collapsing share price, Credit Suisse paid out cash bonuses – albeit with a clause that required them to repay part of the bonus if the bankers quit within three years.
In March, the Credit Suisse crisis ended with its takeover by UBS. The bank had maneuvered itself into the sidelines through years of mismanagement and risky business. Many bankers who leave for competitors receive a signing bonus from the hiring firms that covers the loss or repayment of bonuses. However, such offers are not common everywhere, especially when bankers move into a new industry.
More than 15 percent of the workforce left Credit Suisse voluntarily last year. At the beginning of December – around six months after the takeover of Credit Suisse by UBS – the merger agreement for the operational businesses was now finalized. The merger will most likely be completed in 2024, subject to regulatory approval.
UBS is also preparing the planned merger of UBS Switzerland AG and Credit Suisse (Schweiz) AG, it is said. The merger of the two Swiss companies is also expected in 2024.
Million dollar fine in the USA
On Thursday night it was announced that Credit Suisse was settling a US Securities and Exchange Commission (SEC) investigation into prohibited fund services with a payment of a good ten million US dollars. The CS is said to have violated the regulations when issuing mortgage-backed securities.
Credit Suisse Securities and other Credit Suisse units were prohibited from acting as issuers or advisors for investment funds, according to the SEC announcement. Nevertheless, they worked in these functions.
According to the information, the New Jersey Superior Court closed the case with a settlement order in October 2022. In a settlement with the U.S. Securities and Exchange Commission, Credit Suisse units will now pay more than $7.7 million in restitution and interest, as well as $3.3 million in civil penalties. (Bloomberg/APA)
2023-12-14 14:57:54
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