Today is the day of the Credit Suisse compensation report. Following closely on from the compensation reports of both UBS and Deutsche Bank, it offers a helpful window into comparative pay at the Swiss bank. Despite the Dartmouth Partners bonus survey, which suggested that junior Credit Suisse investment bankers didn't do too badly, today's report suggests Credit Suisse's senior managers and top traders are, on average, paid less than some rivals.
The chart below pertains only to compensation for "material risk takers". At Credit Suisse, there were 1,070 material risk takers in 2017 and they were defined as members of the executive board, people reporting to members of the executive board, as anyone taking "material risks" on behalf of the group, as anyone whose role has been defined by regulators as having a potential impact on group risk, and as the bank's 150 highest paid employees.
In 2017, the average material risk taker at the Credit Suisse Group received a salary of CHF556k ($583k) and a bonus of CHF900k ($949k). While this made for total compensation that was a hefty 42% higher than at Barclays International (Barclays' investment bank), CS paid a lot less than UBS and a lot less than Deutsche's corporate and investment bank (CIB).
In the chart below, Deutsche's pay figures are flattered by the fact that they refer to the CIB alone. UBS's figures are for the bank as a whole. However, UBS only had 707 material risk takers to Credit Suisse's 1,070 in 2017, suggesting that CS cast its net wider, and drew in a higher number of lesser paid employees who may have brought the average down.
This might be why Credit Suisse seems untroubled by its comparative pay figures and says in its compensation report that it won't be hiking salaries this year. Notably, both Credit Suisse and UBS are far more generous with cash bonuses than Deutsche Bank: at DB anyone earning over €500k in total compensation has the entirety of their bonus deferred; at CS and UBS 100% deferrals only apply to employees earning over $2m.
For all the restructuring that's already happened at Credit Suisse's global markets and investment banking and capital markets business, today's report also suggests there's plenty more to come. The Swiss bank's executive board are partly compensated on the basis of the bank's adjusted return on regulatory capital. For 2017 this was 4.3% in global markets and 15% in IBCM. Credit Suisse doesn't divulge its targeted rate of return by business, but in both cases senior managers were paid well below both their target and the lower performance threshold. The restructuring is not over yet.
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