Is Credit Suisse gaming the FSA?

As a quick follow-up to this morning's post about Credit Suisse's new pay policy, someone has to ask the question: Is Credit Suisse gaming the FSA's remuneration code?

Maybe.

Specifically, the new provision that managing directors at CS have to repay the cash components of their bonuses if they leave within two years of receiving them, sounds a little fishy in the context of the FSA's new restrictions on buyouts and guarantees.

In particular, will rival banks poaching Credit Suisse MDs be allowed to compensate them for these cash bonus repayments?

Maybe, but maybe not.

Jonathan Fenn, head of the pensions and employment practice at Slaughter and May, says it's still unclear whether the FSA would allow this kind of repayment to be bought out by new employers.

Jon Terry, head of compensation at PricewaterhouseCoopers, thinks the FSA probably will allow it, but points out that such 'guaranteed' payments to new hires are only allowed in exceptional circumstances.

The implication is, therefore, that if a rival bank tries to hire multiple MDs from Credit Suisse and if all the Credit Suisse want their repayments bought out, the payments won't be exceptional and the payments will be disallowed.

Credit Suisse bankers could therefore be forced to repay the money, without being compensated by the bank they're moving to.

Terry says cash bonus repayments are unlikely to catch on elsewhere. "With cash bonuses already restricted by the EU, most banks are looking for ways to make their senior bankers more comfortable.

"Credit Suisse seem to be doing the opposite," he says.