(Bloomberg) -- Credit Suisse Group AG is handing out retention bonuses to staff whom UBS Group AG sees as critical for the future of the combined bank.
Credit Suisse, in consultation with UBS, has identified a list of employees seen as crucial to both preserving businesses until the deal is done, but also for a smooth combination once they are able to begin integration, people familiar with the matter said.
Credit Suisse sent letters this month awarding guaranteed bonuses, which are made up of cash and UBS shares and include a deferred component, to a small group of senior key employees, the people said, who asked not to be named as the details are private. Those people are also earmarked for an award contingent on performance, the people added.
UBS agreed to takeover Credit Suisse in March after its rival was pushed close to collapse by client withdrawals and a dramatic share-price decline, capping years of scandals and losses. The new awards may help ease the hit for select employees who have seen pieces of their deferred pay wiped out, plunge in value, or cut by government decree.
A second, larger group of Credit Suisse employees, which include both revenue generators such as wealth managers and investment bankers as well as back-office and operational staff important for maintaining platforms and systems, are eligible for an award based on performance, the people said.
“We are taking proactive measures to protect our client franchise, manage risks and facilitate operational stability,” a spokesman for Credit Suisse said. UBS declined to comment on the bonuses.
The moves are meant to combat concern that rivals will use the limbo period to poach valuable personnel and clients before the takeover by UBS is completed this year. The bank said it expects the deal to close in May, at which point it will formally be able to start combining the two businesses and taking stronger actions to stem the flight of assets from Credit Suisse. The integration has been described by UBS Chairman Colm Kelleher as bringing with it a “huge amount of risk.”
The process is ongoing and the bank may not have alerted all eligible employees.
Credit Suisse warned in its first-quarter earnings this week that recent developments had “already increased our employee attrition” and delays in the completion of the transaction could have “a material adverse effect on our business.”
Some bonuses for top staff are being based on what was doled out for performance in 2020 at Credit Suisse, when the total pool was about triple the 2022 level, the people said. Some of the pay will vest over many years, the people said.
Retention awards aren't new for Credit Suisse. It handed out more than 750 million francs of such stay bonuses to almost 1,800 employees over the last two years.
In recent weeks, UBS's wealth boss Iqbal Khan has been crisscrossing the globe to thwart the loss of potential top Credit Suisse wealth bankers. He has spoken with private bankers in offices from Dubai to Doha, met with managers in Hong Kong and Singapore, held townhalls for staff in Europe, and jetted off to Brazil to see performers there.
Credit Suisse lost 280 relationship managers in its key wealth unit over the 12 months through March.
--With assistance from Chanyaporn Chanjaroen.
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