Credit Suisse chief executive Brady Dougan has agreed to give up 20% of his bonus after the bank’s $2.8 billion (CHF2.5 billion) tax evasion fine last year. His fellow executives will take the same cut while directors have agreed to slash their pay by a quarter.
But top bosses are not the only staff to feel the consequences of the United States prosecution. Total compensation at the bank fell 9% last year, partly as a result of the financial sanctions, Credit Suisse announced as it released 2014 earnings.
In a pre-recorded video interview, Dougan praised the bank’s staff for “working through this issue”. He added that the voluntary pay cut decision at executive and board level was taken “in order to reflect the impact of the settlement on the overall results of the firm.”
Credit Suisse posted a CHF2.1 billion ($2.26 billion) profit last year, a slight retreat on the CHF2.3 billion booked in 2013. This included a CHF921 million profit in the last quarter of 2014. The board will propose a dividend of CHF0.70 per share to shareholders at the bank’s annual general meeting.
Strong franc cost cutting
The Swiss National Bank’s decision last month to remove its franc-euro exchange rate ceiling would likely hit profits this year by around 3%, Credit Suisse added. In response, it will impose additional cost cutting measures to save CHF200 million by the end of 2017.
Dougan hinted to journalists that this might involve job cuts in Switzerland, but he declined to give any details. “With the strong franc it has become more expensive to employ people in Switzerland,” he said.
On Tuesday, Credit Suisse’s cross-town rival UBS posted fourth quarter profits of CHF963 million last year. The bank doubled its proposed dividend to CHF0.50 per share. Full year results will be made public next month.
UBS also had its share of litigation problems last year, having been fined $800 million by numerous regulators last November for rigging currency markets. Bonuses for all staff declined 6.7% last year to CHF2.8 billion.
UBS chief executive Sergio Ermotti also had to admit the bank was once again in the sights of the US authorities. He confirmed media reports that the US is taking another look at UBS’s role in assisting tax evaders with the sale of bearer bonds, which are illegal in the US.
UBS was fined $780 million by the US in 2009 after admitting tax evasion offences.