Waiting for some new salary increases at Credit Suisse

15 February 2011

2 minute read

Waiting for some new salary increases at Credit Suisse

The rumours have started. Such was the disappointment with the size of bonuses and the proportion of deferrals at Credit Suisse, that new salary increases are expected.

"People at Credit Suisse are really not happy with the level of deferrals," says one equities headhunter. "Everyone's expecting them to increase salaries again soon."

Credit Suisse reduced its total compensation per head by 13% this year, and cut its bonus pool by 25%. It also introduced a punitive deferral policy in which bonuses for traders and senior staff are delayed over four years and even juniors aren't paid entirely in cash upfront.

This compares very unfavourably with the likes of Citigroup and Goldman Sachs, which are paying mostly in cash, immediately.

Do they really deserve it?

Whether Credit Suisse investment bankers deserve another salary increase is questionable, however.

Clean revenue figures from analysts at Nomura show the bank's equities and FICC businesses underperformed the market last year, with reductions of 20% and 39% versus an average fall of 12% and 24% respectively.

Only CS's M&A and underwriting business did well, increasing clean revenues 24% in 2010, while the market as a whole didn't increase at all.

Credit Suisse doesn't comment on its pay policy. However, in December insiders said there hadn't been another salary increase and headhunters maintain it's looking overdue.

Mid-ranking salaries up at BarCap

Salaries are already creeping up elsewhere.

Barclays Capital is understood to have increased salaries for staff below first year director level by around 20% last Friday.

Morgan Stanley is also seen as a candidate for further increases, having also heavily deferred its bonuses for 2010. However, MS partially mitigated its nasty deferral programme by promoting more people to managing director this year than at any time since 2007, thereby giving 232 of its senior people an instant salary fillip.

As we noted yesterday seven figure salaries are now found in London. But they are rare and reserved for very senior staff only.

In banks where bonuses are massively deferred, mid-ranking staff want a salary increase too. If they don't get one, maybe they'll leave. "Credit Suisse people are very unhappy," maintains another equities headhunter, "if they can, they're going to go elsewhere."

AUTHORSarah Butcher

Global Editor

aN
aNONYMOUS
19 February 2011
you really think contractors are also eligible to be members of bonus pool? If someone said that to you, then I am sorry.
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An
Anonymous
17 February 2011
I am IT contractor at Credit Suisse, Singapore.
Poor me, squeezed myself, and had worked 10 to 12 hours a day, several days a week dreaming that I will get a big pay off by the end of the year, either through bonus, or through salary increase.
Ended up seeing whatever bonus was paid was paid exclusively to employees. Absolutely no salary increase. I feel very much Used.
We know 'no pain = no gain' , But it took me 2 whole years in credit suisse to learn that 'more pain != more gain', here the equation is like 'more pain = even more pain'.
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Pa
Pallas
16 February 2011
They'd better hurry. There are plenty of people here performing roles to which deferment does not logically apply (e.g., compliance, settlement) and for whom the bonus is necessary to achieve parity with market rates or even meet personal cash flow requirements. There is also plenty of "legacy" variance in the base comp of people performing similar roles at similar levels of competence owing to such non-performance factors as when and where they joined the firm (long-servers usually penalized most). Without a bonus pool, things can get ugly fast.
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ex
ex CS
15 February 2011
@ Montell, I'll think you'll find CS were bailed out by the Qataris as well, and that was only about a week before they announced that they'd uncovered their CDO desk had been mismarking their books, they would've been in a far worse position than Barcap had this occurred the other way around.
But on a whole you are right, they take less risk and are more considerate of their shareholders at the expense of their employees than most banks. Would I buy their stock in a bull market, no, would their stock outperform in a bear market, probably, would I sleep soundly at night if I'd deposited all my money with them, absolutely.
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Mo
Montell
15 February 2011
Credit Suisse are a class act. Their 'punitive' scheme gives senior staff long term incentive to take sensible risks. Profits are down because they're taking the right kinds of risks and when huge chunks of the developed worlds' economies are contracting in real terms why would you expect profits to be up? Obviously this is terrible for staff but great for shareholders. And again I don't recalled CS being bailed out to the extent GS&Barcap were (Buffett,Qatar respectively).
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