Geneva (AFP) - The Swiss government said Wednesday it would scrap the outstanding bonuses of Credit Suisse's executive board following the bank's implosion and emergency takeover by rival UBS.
The government -- which engineered the merger -- said the move was due to the top-level management's "responsibility" for the decline of the 167-year-old institution.
Bern also said it would slash the bonuses of those at the next two levels down, in a move affecting around 1,000 employees who will be deprived of around 50 to 60 million Swiss francs ($55-66 million).
"At Credit Suisse, all outstanding variable remuneration up to the end of 2022 will be cancelled for the highest level of management (executive board)," the government said in a statement.
It will be cut by 50 percent for managers one level below the board, and by 25 percent for the next level down.
"This differentiated approach takes account of the most senior managers' responsibility for the situation at Credit Suisse," the government said.
"For 2023, all variable remuneration accruing until completion of the takeover by UBS will be cancelled or reduced for the top three levels of management."
167 years of history
Credit Suisse was the second-biggest bank in the country after UBS and a pillar in the country's cherished banking landscape.
Credit Suisse suffered a string of scandals in recent years and the collapse of three US banks earlier in the month left it looking vulnerable amid fears of contagion.
Shares went into free-fall and, fearing a collapse that could have triggered a global banking crisis, a takeover was hastily arranged on March 19.
The government, the FINMA financial regulators and the Swiss National Bank (SNB) -- the Alpine nation's central bank -- strongarmed UBS into the merger, before the markets reopened on March 20.
The government noted that some 49,000 Credit Suisse employees had been awarded 2.76 billion Swiss francs in deferred variable remuneration -- but it was now worth 635 million francs.
"In other words, all employees have already had to bear a total loss of more than two billion Swiss francs due to the drop in Credit Suisse's share price," it said.
Credit Suisse has to look into whether bonuses already paid out can be recovered, and report to the finance ministry and FINMA, the government added.
Switzerland's Banking Act states that the government should impose remuneration-related measures if a systemically-important bank is directly or indirectly granted state aid.
Credit Suisse was granted 100 billion Swiss francs in liquidity assistance provided by the SNB and $9 billion for protection against any losses incurred by UBS when selling certain Credit Suisse assets.
Angry shareholders in tears
The move comes a day after Credit Suisse held its final annual general meeting before the mega-merger, at which many shareholders called for management bonuses to be clawed back.
Credit Suisse chairman Axel Lehmann said he was "truly sorry" that the bank could not be saved as he faced angry and tearful shareholders whose money has gone up in smoke.
Several shareholders took to the podium to savage the board.
"Make sure that these incompetent, greedy people do not get any money paid, any bonuses paid and we need to make sure they pay back the bonuses they never really earned," one shareholder said.
One woman shareholder from Bern said: "We need to stop all bonus payments, and payback of the money pocketed."
Vincent Kaufmann, director of the Ethos foundation, which represents pension funds in Switzerland and owns stakes in Credit Suisse, said he had repeatedly called over the years for a "drastic reduction in variable compensation".
He told AFP it was "one of the reasons why bank employees have taken ever higher risks which have fooled the control systems".
And shareholder Albert Keel added: "We knew for decades we had paid too many bonuses.The bank got emptied."
