Credit Suisse shows toxic bonuses are absolutely no obstacle to success

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Other banks might get ideas. When Credit Suisse announced its toxic asset bonus programme last December, it was expected to spark widespread resignations.

Seven months on, headcount is almost unfeasibly static and Credit Suisse has earned its place in the pantheon of premier investment banks.

It recorded a fivefold increase in investment banking earnings in the second quarter, and increased market share in everything from prime services, to cash equities, algorithmic and electronic trading, rates, foreign exchange and investment grade bonds.

Moreover, it appears to have achieved all this without whacking up salaries (and therefore fixed costs) in the style of UBS and Morgan Stanley.

Accrued compensation per head in the investment bank has, however, risen 50% in the first half, to CHF301k, or $281k.

Last year, 70-80% of bonuses to managing directors were paid in the form of toxic assets inaccessible for five years. It's not clear whether this year's payouts will take a similar form.

Headhunters suggest Credit Suisse bankers remain confused about the true value of last year's toxic awards. "Most of them have discounted them to zero and are not happy," says one. "Most senior guys are pretty happy with the way the assets were valued, they've done a good job of tying people in," says another.

"I've no idea how much my bonus for last year is worth," one Credit Suisse managing director tells us. "We received an enormous wedge of paper which no one understands. Some of my more diligent colleagues might have read it, but let's just say that I haven't spent it already."

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