Credit Suisse has had a pretty good crisis. It has not required state aid, nor has it had to seek solace in the arms of a sovereign wealth fund or generous cornerstone investor. Instead, the crisis has seen the bank cement its own turnaround, and drastically boost its equity and investment banking businesses. It did not escape unscathed, of course. Credit Suisse posted a full year net loss of CHF8.2bn ($7.78bn) for 2008, but rebounded with a CHF6.7bn profit in 2009, largely due to its best-ever performance in investment banking.
The bank has cast itself an identity built on prudence and sound capital management. This has been helped by the distinctive approach taken to compensation. At the height of the crisis it established the groundbreaking Partners Asset Facility (PAF), through which bonuses were paid out of illiquid loans and bonds. In this year's bonus round, it has kept a lid on expectations: variable compensation for 2009 was down by 21% versus 2007 (the investment bank proffered a low compensation to revenue level of 41%). In addition, 40% of the total variable compensation (close to 60% for managing directors) was in the form of deferred awards that are subject to performance criteria. While this deferred framework may have cost implications further down the line, for now it reinforces Credit Suisse's reputation as the responsible bank.
