Credit Suisse sets up SFr249m special bonus fund to cling onto its top bankers, despite being in the red for 2016

Hayley Kirton
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Credit Suisse opted to slash bonuses in 2015, and staff started to look elsewhere (Source: Getty)

Credit Suisse has become the latest European bank to fence off a special bonus pool in a bid to hang onto its top bankers.

The bank, which made a loss of SFr 2.7bn (£2.2bn) in 2016, increased its overall bonus pool by six per cent to SFr 3.1bn, as well as earmarking SFr 249m for bankers in its global markets and investment banking and capital markets divisions which it feared it would struggle to keep otherwise.

The bank pinned the decision to boost bonuses despite being in the red on the bad reaction its top performing staff had to a 36 per cent group wide cut to the bonus pool the year before.

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"These reductions resulted in serious retention issues in global markets and investment banking & capital markets in the first quarter of 2016, which led the board to approve special retention awards to prevent harmful departures of critical staff," Credit Suisse noted in its annual report.

The bank also revealed 44 per cent of the bonuses it handed out for the year were on a deferred basis, meaning they are subject to future service and performance, while the SFr 249m pool consists of deferred shares and cash.

Deutsche Bank's annual report, which was released last week, also revealed the German bank had put aside extra cash to retain its top performing staff.

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The Frankfurt-headquartered lender said it was awarding roughly one in 20 of its bankers a share from a €1.1bn (£950m) pot of cash and shares, deferred for at least three years.

However, unlike Credit Suisse, Deutsche Bank cut its overall bonus payouts for the year by a steep 77 per cent.

Also, while now boss of Credit Suisse and former man from the Pru Tidjane Thiam was awarded short-term incentives of SFr4.2m, Yorkshire-born Deutsche Bank chief exec John Cryan waived his bonus for the second year running.

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Both European banks had a tricky 2016, thanks to fines from the US Department of Justice for mis-selling mortgage-backed securities. Credit Suisse settled for $5.3bn (£4.3bn) in January this year.

Deutsche Bank, which recently kicked off a €8bn rights issue in a bid to shore up its capital, settled for $7.2bn in the same month. At one point, it was feared the German bank's penalty could be as high as $14bn.

Bonus pools dished out by the UK's big lenders have become shallower in 2016 as well, slipping five per cent compared with the year before.

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In particular, HSBC, which reported a 62 per cent drop in its pre-tax profits, slashed its bonus pot by 12 per cent, while Barclays trimmed one per cent from its bonuses, despite almost tripling its profits before tax.

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