Credit Suisse Bankers Lose Final Bid to Win Back Bonuses at Swiss Top Court

(Bloomberg) — Credit Suisse bankers that lost their bonuses when the bank was rescued by UBS Group AG won’t get that money back, Switzerland’s top court ruled.

Paying the bonuses would be unlawful as billions of taxpayer money was used to support the rescue package, the judges said. The decision overturned an earlier ruling that could have benefited as many as 1,000 ex-employees.

“Given the extent of the required state aid, there is a public interest in preventing unreasonably high variable compensation,” the Swiss Supreme Court said in a Sept. 16 ruling released on Thursday.

The verdict, which can’t be appealed, draws a line under the attempt by former Credit Suisse staff to receive bonuses they argued were wrongfully taken away from them. While the lower court ruling from 2025 was for a test group of 12 employees, it said its decision could ultimately affect about 1,000 people. The court didn’t say how big the potential bonus pool was.

Credit Suisse was bought in March 2023 by its larger Swiss rival backed by a 9 billion franc ($10.9 billion) loss protection agreement and a public liquidity backstop of up to 100 billion Swiss francs ($121 billion), which UBS later ended.

As part of that rescue, the Swiss finance ministry ordered Credit Suisse to cut bonuses altogether for its executive board members, reduce them by 50% for managers a level lower, and by 25% for employees two levels down.

The top court’s verdict endorses the finance ministry’s original order, and upholds the appeal from the Swiss government and UBS. “UBS takes note of the decision,” the bank said.

On Thursday, the Supreme Court highlighted the need to not put public money toward paying banker bonuses. It also said existing Swiss bank law provides justification for the original decision to scrap the bonuses and that the lower court’s interpretation of the case was too narrow.

The court stipulated that the cancellation of bonuses is limited to bonuses guaranteed by the end of 2022 but not yet paid out as of March 21, 2023 the date of Credit Suisse’s rescue. Also included is variable compensation guaranteed or maturing in 2023, from March 22 until no later than the repayment of the state aid or the transfer of Credit Suisse employees onto UBS’s payroll.

‘Perverse Incentives’

Lastly, the Supreme Court in its ruling also tackled the potential complaint that those bonuses should be paid given that UBS repaid its state aid commitments.

“If the payment of variable compensation were merely deferred, the respondents would still indirectly benefit from the state aid — with a time lag — which creates perverse incentives,” said the court.

UBS is locked in disputes over other aspects of the Credit Suisse rescue. The bank is appealing a Swiss administrative court’s decision to revoke the writedown of AT1 bonds ordered by Swiss banking regulator Finma as part of the bailout package.

AT1s are a risky form of investment, and the Swiss government and Finma contend that investors should have known about the conditions contained in the bonds’ fine-print. The AT1 bondholders disagree, arguing that Credit Suisse shareholders should’ve absorbed losses before them.

The Zurich-based bank is also fighting a battle with the Swiss government over its capital requirements, a tussle that has prompted debate over whether it could or should leave the country.

–With assistance from Myriam Balezou.

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