Credit Suisse Expands Bonus Program in Bid to Secure Talent
- Despite suffering a 2.4 billiob loss in 2016, Credit Suisse is increasing its bonus pool by 6 percent.
Despite Credit Suisse seeing a sizable -$2.4 billion loss in 2016, the group has opted to expand its bonus pool at a time when the industry seems to be contracting. The lender announced a bonus pool expansion of 6.0 percent, a move that clearly is running counter to the strategy being deployed by other banks presently.
Credit Suisse recently made headlines for further rounds of cuts – these losses were restricted to jobs in its Asian equities desks, as well as another 5,500 positions forthcoming. These announcements also followed the loss, which cast a shadow on its 2017 outlook.
These factors were not enough to deter Credit Suisse’s top brass however, with their bonus pool actually growing in 2017, including a sizable bump for CEO Tidjane Thiam, according to a Bloomberg report. Other lenders have chosen a different course, such as Deutsche Bank, having gutted its bonus pool or opting for different payout strategies in the form of shares.
To be fair, Credit Suisse is in the midst of its restructuring plan, with Mr. Thiam pledging a turnaround for the lender. Like its other European counterparts, lenders have struggled to restore profitability, also grappling with the upcoming Brexit Brexit Brexit stands for British Exit, or in reference to the United Kingdom’s decision to formally leave the European Union (EU) as declared in a June 23, 2016 referendum. In a more immediate sense, a tight vote and unexpected result helped drive British pound (GBP) to lows that had not been seen in decades. The day following the referendum, former Prime Minister David Cameron resigned from office where he was replaced by Theresa May, who later resigned from office on June 7th, 2019. Active Prime Minister Boris Johnson was elected Prime Minister the following month, who was well-known as a headstrong Brexit supporter. While the United Kingdom was predicted to leave exit the EU by October 31st, 2019, the U.K. Parliament sought out a deadline extension that delayed voting on the new deal. Following Boris Johnson’s reelection, Brexit occurred on January 31st, 2020 at 11 pm Greenwich Mean Time. Brexit Creating Ongoing Issues in with Europe While the United Kingdom is in a transition period following its departure from the EU, the U.K. is negotiating its complete trade relationship with the EU, which is the United Kingdom’s largest trade partner. Terms of this trade agreement must be met by January 1st, 2021. Should terms of this trade agreement take longer than the projected resolution date of January 1st, 2021 then the U.K. must acquire an extension no later than June 1st, 2020. Failure to do so will result in the U.K. is subject to tariff and host rule changes exercised by the E.U. This situation is referred to as the “no-deal” Brexit and should this occur the consequences could result in a significant fallout of the U.K. economy. For the past few years, many banks and lenders operating previously in the UK had been given passporting rights to the European continent. The lingering uncertainty caused by Brexit resulted in many of these lenders relocating their European headquarters within continental Europe. Brexit stands for British Exit, or in reference to the United Kingdom’s decision to formally leave the European Union (EU) as declared in a June 23, 2016 referendum. In a more immediate sense, a tight vote and unexpected result helped drive British pound (GBP) to lows that had not been seen in decades. The day following the referendum, former Prime Minister David Cameron resigned from office where he was replaced by Theresa May, who later resigned from office on June 7th, 2019. Active Prime Minister Boris Johnson was elected Prime Minister the following month, who was well-known as a headstrong Brexit supporter. While the United Kingdom was predicted to leave exit the EU by October 31st, 2019, the U.K. Parliament sought out a deadline extension that delayed voting on the new deal. Following Boris Johnson’s reelection, Brexit occurred on January 31st, 2020 at 11 pm Greenwich Mean Time. Brexit Creating Ongoing Issues in with Europe While the United Kingdom is in a transition period following its departure from the EU, the U.K. is negotiating its complete trade relationship with the EU, which is the United Kingdom’s largest trade partner. Terms of this trade agreement must be met by January 1st, 2021. Should terms of this trade agreement take longer than the projected resolution date of January 1st, 2021 then the U.K. must acquire an extension no later than June 1st, 2020. Failure to do so will result in the U.K. is subject to tariff and host rule changes exercised by the E.U. This situation is referred to as the “no-deal” Brexit and should this occur the consequences could result in a significant fallout of the U.K. economy. For the past few years, many banks and lenders operating previously in the UK had been given passporting rights to the European continent. The lingering uncertainty caused by Brexit resulted in many of these lenders relocating their European headquarters within continental Europe. Read this Term schism that is unlikely to Yield Yield A yield is defined as the earnings generated by an investment or security over a particular time period. This is in typically displayed in percentage terms and is in the form of interest or dividends received from it.Yields do not include the price variations, which differentiates it from the total return. As such, a yield applies to various stated rates of return on stocks, fixed income instruments such as bonds, and other types of investment products.Yields can be calculated as a ratio or as an internal rate of return, which may also be used to indicate the owner's total return, or portion of income, etc.Understanding Yields in FinanceAt any point in time, all financial instruments compete with each other in a given marketplace. Analyzing yields is simply one metric and reflects a singular part of the total return of holding a security. For example, a higher yield allows the owner to recoup his investment sooner, and thus mitigates risk. Conversely, a high yield may have resulted from a falling market value for the security as a result of higher risk. Yield levels are also dictated by expectations of inflation. Indeed, fears of higher levels of inflation in the future suggest that investors would ask for high yield or a lower price versus the coupon today.The maturity of the instrument is also one of the elements that determines risk. The relationship between yields and the maturity of instruments of similar credit worthiness, is described by the yield curve. Overall, long dated instruments typically have a higher yield than short dated instruments.The yield of a debt instrument is typically linked to the credit worthiness and default probability of the issuer. Consequently, the more the default risk, the higher the yield would be in most of the cases since issuers need to offer investors some compensation for the risk. A yield is defined as the earnings generated by an investment or security over a particular time period. This is in typically displayed in percentage terms and is in the form of interest or dividends received from it.Yields do not include the price variations, which differentiates it from the total return. As such, a yield applies to various stated rates of return on stocks, fixed income instruments such as bonds, and other types of investment products.Yields can be calculated as a ratio or as an internal rate of return, which may also be used to indicate the owner's total return, or portion of income, etc.Understanding Yields in FinanceAt any point in time, all financial instruments compete with each other in a given marketplace. Analyzing yields is simply one metric and reflects a singular part of the total return of holding a security. For example, a higher yield allows the owner to recoup his investment sooner, and thus mitigates risk. Conversely, a high yield may have resulted from a falling market value for the security as a result of higher risk. Yield levels are also dictated by expectations of inflation. Indeed, fears of higher levels of inflation in the future suggest that investors would ask for high yield or a lower price versus the coupon today.The maturity of the instrument is also one of the elements that determines risk. The relationship between yields and the maturity of instruments of similar credit worthiness, is described by the yield curve. Overall, long dated instruments typically have a higher yield than short dated instruments.The yield of a debt instrument is typically linked to the credit worthiness and default probability of the issuer. Consequently, the more the default risk, the higher the yield would be in most of the cases since issuers need to offer investors some compensation for the risk. Read this Term any positives for the banking community, especially in the UK.
One reason for the strategy of expanded bonuses may be a bid to help retain its top tier talent. One issue that cropped up in its year-end report were problems of retaining their talent – indeed, Credit Suisse has seen an exodus of premier banking and trading veterans, not unlike other lenders over 2016.
Such a carrot could be, at least during a time when all rivals are slashing bonuses, an enticing option for those seeking greener pastures.
Despite Credit Suisse seeing a sizable -$2.4 billion loss in 2016, the group has opted to expand its bonus pool at a time when the industry seems to be contracting. The lender announced a bonus pool expansion of 6.0 percent, a move that clearly is running counter to the strategy being deployed by other banks presently.
Credit Suisse recently made headlines for further rounds of cuts – these losses were restricted to jobs in its Asian equities desks, as well as another 5,500 positions forthcoming. These announcements also followed the loss, which cast a shadow on its 2017 outlook.
These factors were not enough to deter Credit Suisse’s top brass however, with their bonus pool actually growing in 2017, including a sizable bump for CEO Tidjane Thiam, according to a Bloomberg report. Other lenders have chosen a different course, such as Deutsche Bank, having gutted its bonus pool or opting for different payout strategies in the form of shares.
To be fair, Credit Suisse is in the midst of its restructuring plan, with Mr. Thiam pledging a turnaround for the lender. Like its other European counterparts, lenders have struggled to restore profitability, also grappling with the upcoming Brexit Brexit Brexit stands for British Exit, or in reference to the United Kingdom’s decision to formally leave the European Union (EU) as declared in a June 23, 2016 referendum. In a more immediate sense, a tight vote and unexpected result helped drive British pound (GBP) to lows that had not been seen in decades. The day following the referendum, former Prime Minister David Cameron resigned from office where he was replaced by Theresa May, who later resigned from office on June 7th, 2019. Active Prime Minister Boris Johnson was elected Prime Minister the following month, who was well-known as a headstrong Brexit supporter. While the United Kingdom was predicted to leave exit the EU by October 31st, 2019, the U.K. Parliament sought out a deadline extension that delayed voting on the new deal. Following Boris Johnson’s reelection, Brexit occurred on January 31st, 2020 at 11 pm Greenwich Mean Time. Brexit Creating Ongoing Issues in with Europe While the United Kingdom is in a transition period following its departure from the EU, the U.K. is negotiating its complete trade relationship with the EU, which is the United Kingdom’s largest trade partner. Terms of this trade agreement must be met by January 1st, 2021. Should terms of this trade agreement take longer than the projected resolution date of January 1st, 2021 then the U.K. must acquire an extension no later than June 1st, 2020. Failure to do so will result in the U.K. is subject to tariff and host rule changes exercised by the E.U. This situation is referred to as the “no-deal” Brexit and should this occur the consequences could result in a significant fallout of the U.K. economy. For the past few years, many banks and lenders operating previously in the UK had been given passporting rights to the European continent. The lingering uncertainty caused by Brexit resulted in many of these lenders relocating their European headquarters within continental Europe. Brexit stands for British Exit, or in reference to the United Kingdom’s decision to formally leave the European Union (EU) as declared in a June 23, 2016 referendum. In a more immediate sense, a tight vote and unexpected result helped drive British pound (GBP) to lows that had not been seen in decades. The day following the referendum, former Prime Minister David Cameron resigned from office where he was replaced by Theresa May, who later resigned from office on June 7th, 2019. Active Prime Minister Boris Johnson was elected Prime Minister the following month, who was well-known as a headstrong Brexit supporter. While the United Kingdom was predicted to leave exit the EU by October 31st, 2019, the U.K. Parliament sought out a deadline extension that delayed voting on the new deal. Following Boris Johnson’s reelection, Brexit occurred on January 31st, 2020 at 11 pm Greenwich Mean Time. Brexit Creating Ongoing Issues in with Europe While the United Kingdom is in a transition period following its departure from the EU, the U.K. is negotiating its complete trade relationship with the EU, which is the United Kingdom’s largest trade partner. Terms of this trade agreement must be met by January 1st, 2021. Should terms of this trade agreement take longer than the projected resolution date of January 1st, 2021 then the U.K. must acquire an extension no later than June 1st, 2020. Failure to do so will result in the U.K. is subject to tariff and host rule changes exercised by the E.U. This situation is referred to as the “no-deal” Brexit and should this occur the consequences could result in a significant fallout of the U.K. economy. For the past few years, many banks and lenders operating previously in the UK had been given passporting rights to the European continent. The lingering uncertainty caused by Brexit resulted in many of these lenders relocating their European headquarters within continental Europe. Read this Term schism that is unlikely to Yield Yield A yield is defined as the earnings generated by an investment or security over a particular time period. This is in typically displayed in percentage terms and is in the form of interest or dividends received from it.Yields do not include the price variations, which differentiates it from the total return. As such, a yield applies to various stated rates of return on stocks, fixed income instruments such as bonds, and other types of investment products.Yields can be calculated as a ratio or as an internal rate of return, which may also be used to indicate the owner's total return, or portion of income, etc.Understanding Yields in FinanceAt any point in time, all financial instruments compete with each other in a given marketplace. Analyzing yields is simply one metric and reflects a singular part of the total return of holding a security. For example, a higher yield allows the owner to recoup his investment sooner, and thus mitigates risk. Conversely, a high yield may have resulted from a falling market value for the security as a result of higher risk. Yield levels are also dictated by expectations of inflation. Indeed, fears of higher levels of inflation in the future suggest that investors would ask for high yield or a lower price versus the coupon today.The maturity of the instrument is also one of the elements that determines risk. The relationship between yields and the maturity of instruments of similar credit worthiness, is described by the yield curve. Overall, long dated instruments typically have a higher yield than short dated instruments.The yield of a debt instrument is typically linked to the credit worthiness and default probability of the issuer. Consequently, the more the default risk, the higher the yield would be in most of the cases since issuers need to offer investors some compensation for the risk. A yield is defined as the earnings generated by an investment or security over a particular time period. This is in typically displayed in percentage terms and is in the form of interest or dividends received from it.Yields do not include the price variations, which differentiates it from the total return. As such, a yield applies to various stated rates of return on stocks, fixed income instruments such as bonds, and other types of investment products.Yields can be calculated as a ratio or as an internal rate of return, which may also be used to indicate the owner's total return, or portion of income, etc.Understanding Yields in FinanceAt any point in time, all financial instruments compete with each other in a given marketplace. Analyzing yields is simply one metric and reflects a singular part of the total return of holding a security. For example, a higher yield allows the owner to recoup his investment sooner, and thus mitigates risk. Conversely, a high yield may have resulted from a falling market value for the security as a result of higher risk. Yield levels are also dictated by expectations of inflation. Indeed, fears of higher levels of inflation in the future suggest that investors would ask for high yield or a lower price versus the coupon today.The maturity of the instrument is also one of the elements that determines risk. The relationship between yields and the maturity of instruments of similar credit worthiness, is described by the yield curve. Overall, long dated instruments typically have a higher yield than short dated instruments.The yield of a debt instrument is typically linked to the credit worthiness and default probability of the issuer. Consequently, the more the default risk, the higher the yield would be in most of the cases since issuers need to offer investors some compensation for the risk. Read this Term any positives for the banking community, especially in the UK.
One reason for the strategy of expanded bonuses may be a bid to help retain its top tier talent. One issue that cropped up in its year-end report were problems of retaining their talent – indeed, Credit Suisse has seen an exodus of premier banking and trading veterans, not unlike other lenders over 2016.
Such a carrot could be, at least during a time when all rivals are slashing bonuses, an enticing option for those seeking greener pastures.