Feb. 3 (Bloomberg) -- Credit Suisse Group AG, Switzerland’s second-largest bank, plans to cut bonuses for investment bankers by about 55 percent following $13.6 billion of credit writedowns, two people familiar with the situation said.

Credit Suisse, along with New York-based Morgan Stanley and UBS AG, has already added so-called clawback provisions that allow the bank to recoup part of the payment in later years if an employee leaves or is found to have behaved in ways that hurt the company. Marc Dosch, a spokesman for the Zurich-based bank, declined to comment.

UBS, Deutsche Bank AG and other banks are slashing bonuses after the industry racked up more than $1 trillion of losses and writedowns on credit-related assets. Deutsche Bank, Germany’s biggest lender, will cut its bonus pool by about 60 percent after reporting a record loss, a person with knowledge of the situation said yesterday. The industry is under political pressure to curb pay as governments consider plans to remove toxic assets that have clogged lenders’ balance sheets.

“The banks have yet to adjust to the political time bomb that compensation rounds are going to cause in the world outside,” Shaun Springer, chief executive officer of London- based Napier Scott Executive Search Ltd. said by telephone. “Banks are politically aware of the sentiment out there.”

Investment bankers earn about 85,000 pounds ($120,000) in average salary, while more senior managing directors get about 125,000 pounds, according to Jason Kennedy, CEO of London-based recruiter Kennedy Associates. Year-end bonuses typically account for the majority of a banker’s total compensation, he added.

U.S. Bonuses

In the U.S., the five biggest investment banks -- Goldman Sachs Group Inc., Morgan Stanley, Merrill Lynch & Co., Lehman Brothers Holdings Inc. and Bear Stearns Cos. -- awarded a cumulative $145 billion in bonuses between 2003 and 2007, according to estimates based on company reports. The firms paid out a record $39 billion in 2007. Lehman has since gone bankrupt; Bear Stearns and Merrill have been bought by commercial banks.

Credit Suisse said in December that Chief Executive Officer Brady Dougan, Chairman Walter Kielholz and Paul Calello, head of the investment bank, will forgo bonuses for 2008 after the bank lost about 3 billion Swiss francs ($2.6 billion) in October and November. The stock has lost more than half its value in the past 12 months.

The bank, which has announced 7,420 job cuts, will also use illiquid securities such as leveraged loans and commercial mortgage-backed debt to pay part of the bonuses for managing directors and directors within the securities unit. The investment bank employed 21,300 people at the end of September.

Bonuses Slashed

UBS, the European bank with the biggest writedowns and losses from the credit crisis, was told to reduce bonuses after the Swiss government gave the country’s biggest bank a $59.2 billion lifeline. The bank said last week it cut its bonus pool for the whole company, excluding U.S. brokers, by more than 80 percent to less than 2 billion francs.

Cash bonuses paid to New York City employees of Wall Street firms dropped 44 percent last year amid record losses in the industry, state Comptroller Thomas DiNapoli said last week. Financial firms disbursed $18.4 billion, compared with $32.9 billion in 2007, DiNapoli’s office calculated, basing its estimate mainly on personal income-tax collections.

To contact the reporters on this story: Ambereen Choudhury in London at achoudhury@bloomberg.net; Elena Logutenkova in Zurich at elogutenkova@bloomberg.net

Last Updated: February 3, 2009 09:05 EST