Credit Suisse CEO Says Staff Shouldn't Expect Big Raises

Updated on
  • Thiam and board members agreed to cut bonuses after backlash
  • Sees Credit Suisse as profitable after two years of losses
Credit Suisse CEO Tidjane Thiam discusses the bank’s restructuring plan and the industry.

Credit Suisse Group AG Chief Executive Officer Tidjane Thiam, who agreed to accept a lower bonus this year, said employees shouldn’t think about a big pay rise for 2017 as the bank emerges from two years of restructuring.

“This year, with the improvement in results, there will be a balance,” Thiam said Tuesday in an interview on Bloomberg TV. “You should not expect anything spectacular, but something fair. Not a big increase compared to the previous year.”

Credit Suisse, among the few banks to boost its bonus pool in 2016, is heading into the final year of an overhaul aimed at reducing reliance on volatile trading in favor of wealth management and emerging markets. The restructuring has included raising 10 billion francs ($10.2 billion) from shareholders to strengthen capital, with Thiam saying that all options are on the table for returning cash to investors in the future as profitability improves.

“Painfully Aware”

“The shareholders have been through a lot,” Thiam said. “I’m painfully aware that I had to dilute my shareholders very significantly. “As we generate more profit and the bank does better,” he said, “the goal of all this is to return capital to shareholders.”

Global Markets, the trading business led by Brian Chin, posted pretax profit of 645 million francs in the first nine month of the year, compared with 43 million a year earlier. The advisory business, led by Jim Amine, recorded a profit of 262 million francs, up from 112 million francs. Still, Amine, in a memo to staff earlier this month, said that the remainder of the year will be “critical” for the unit to meet its annual objectives.

Investor Opposition

The bank awarded 3.09 billion francs in incentive pay for 2016, a 6 percent increase from a year earlier, even as charges tied to legal settlements pushed it to a second consecutive annual loss. Thiam and the executive board agreed to have their proposed bonuses cut by 40 percent in April after a rising number of investor advisory groups opposed the packages.

Even with the cut, Thiam is among the best-paid CEOs in Europe with a total compensation of approximately 10.2 million francs. Switzerland’s other big bank, UBS Group AG, pays CEO Sergio Ermotti about 13.7 million francs. Shareholders at Credit Suisse’s annual general meeting in April approved 17 million francs for senior executives for achieving short-term targets and 31 million francs in shares for performance tied to long-term goals.

Swiss laws introduced in 2015 require companies listed in the country to give shareholders a binding vote on board and executive pay.

Thiam said on Tuesday that the bank will be profitable for 2017, with further improvements expected in the following years. Options for shareholder returns could include special dividends or share buybacks, he said.

He’s not the only Swiss banker with shareholder returns on his mind. UBS Group AG Chief Executive Officer Sergio Ermotti last month signaled that the world’s largest wealth manager has resolved its capital and legacy costs and shareholders’ focus is turning to returns.

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