Bonuses paid to Credit Suisse employees are vital to UBS's merger‍

Various bonuses are being handed out by Credit Suisse Group AG to staff members that UBS Group AG believes are crucial to the long-term success of the bank that will be merged with Credit Suisse Group AG. 

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People familiar with the matter said that Credit Suisse, in collaboration with UBS, has put together a list of employees deemed to be vital both to maintain business until the deal is completed, and to ensure a smooth process once they are able to begin the integration process, once it has been completed.

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Several senior key employees were awarded guaranteed bonuses from Credit Suisse this month, which were made up of cash, UBS shares, and a deferred component. The people asked not to be named as the details are private, but said the company sent the letters to a small group of key employees. A contingent award is also to be given to those people depending on their performance, the people said.

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As a result of client withdrawals and a dramatic decline in the share price of Credit Suisse, UBS agreed to purchase the company in March, capping an era of scandals and losses for Credit Suisse. As a result of the new awards, select employees who have seen pieces of their deferred pay wipe out, plummet in value, or be reduced by government decree may be able to ease their financial burden.

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Second, there is a group of people at Credit Suisse who are eligible for a performance award based on their performance, including both revenue generators like wealth managers and investment bankers as well as back-office and operational staff who keep platforms and systems up and running, according to the people cited.

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Credit Suisse said it was taking proactive measures to protect the client franchise, manage risks, and maintain operational stability on behalf of its clients. UBS, however, declined to comment on the bonus program. 

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During this period, rivals may attempt to poach valuable personnel and clients, but this move is meant to counter fears that rivals may use it to poach valuable personnel and clients before UBS completes its takeover. After the deal has been announced, the bank believes it will be able to start combining the two companies and to take stronger actions in order to stem Credit Suisse assets from being stolen. As a result of the integration, UBS Chairman Colm Kelleher has expressed concern that there is a huge amount of risk involved with it.

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The bank has not notified all eligible employees of the process yet since it is still in the process of being completed.

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As Credit Suisse warned in its first-quarter earnings report released this week, any delays in the sale of the company might adversely affect its business and have a material impact on its earnings. Recent developments have "already increased our employee attrition," the company said. 

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People are saying that some bonuses, which are being handed out to credit Suisse's top staff, are based on what the company gave out in 2020, when the total pool of bonuses was about three times that of 2022, according to people familiar with the matter.

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Credit Suisse is no stranger to retention awards and over the past two years has provided almost 1,800 employees with stay bonuses totaling more than 750 million francs in retention awards.

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It has been my pleasure to talk with UBS' wealth chief Iqbal Khan over the past few weeks, who has been traveling around the world trying to thwart the departure of potential top Credit Suisse wealth bankers. In addition to talking to private bankers in Dubai, Doha, and Hong Kong offices, he has held town halls for employees in Europe, and visited Brazil to see performances there. 

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Within the key wealth unit of Credit Suisse, which is at the heart of the company's profits, 280 relationship managers have left in the last 12 months.

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