Even in the biggest crisis, Credit Suisse is unable to say goodbye to its outdated incentive structures. In the view of finews.com, a new start is urgently needed.
Credit Suisse's delayed 2022 annual report, awaited with great anticipation, reveals a degree of moderation when it comes to compensation, especially at the executive level. Top managers are not getting a bonus for a year marked by one crisis after another, and lower-echelon employees will have to settle for less in many cases, as finews.com reported Tuesday.
Still, Tuesday's report projects an attitude but shows little insight. Ultimately it's about a wide range of incentives practically nonexistent in other industries, or at least not to such an extent.
A Buffet of Rewards
The report outlines transformation rewards, inaugural payments, and other special compensation which, taken together, amount to a total compensation reduction of only two percent. So even before top Credit Suisse executives managed to accomplish anything as part of an unavoidable reorganization, the prospects of hefty compensation packages are being dangled before them.
The banking industry has always worked with such incentive systems, which are fine if they work. In the case of Credit Suisse, things are somewhat different. The bank is not only in the midst of the biggest crisis in its history, but it could also face real existential problems in the coming weeks and months.
Customers are still pulling out their money, and the stock price can't seem to find a solid floor. Adding to the woes is the banking crisis that erupted in the US which is sending shock waves around the globe, the fallout of which is having a very strong impact on Credit Suisse.
Stabilize Banking Operations
Against this backdrop, the mindset underpinning the new incentives seems absurd. They give the impression that it is enough to continue reorganizing until the big payoff beckons. The primary task now should be to stabilize the situation for functioning banking operations.
However, the bank's decision-makers with their entitlement mentality, fail to recognize the seriousness of the situation and display an outdated wage and profit drive inappropriate in the current situation. Such an attitude hardly indicates a cultural change that top management has been harping about for months.
Flag of Sustainability
At the same time, Credit Suisse is flying the sustainability flag to the outside world and flooding its clientele with offers of financial services. The strategy has not been successful so far, especially since so many client funds are still flowing in the wrong direction. In the meantime, even the core business of this once-so-important institution is threatened, and the preaching of sustainability is useless so long as it is not practiced at the top levels.
