It's an important week at Credit Suisse. After a year of traumas, the Swiss bank is in the process of promoting its new class of managing directors.
It's not clear who's been promoted yet, but insiders say the fortunate individuals were either told yesterday or are being told today. Many of those who expected a promotion have seemingly been lucky, in what is likely to have been a bumper year.
Credit Suisse promoted 150 people to managing director in 2020, down from 177 in 2019. This year's list is likely to be the biggest of the lot as the Swiss bank uses promotions as a retention tool in the face of a bonus squeeze. - Compensation spending at Credit Suisse's investment bank was cut by 11% year-on-year in the first nine months of 2021, although headcount rose by 1%. JPMorgan's banking analysts predict that Credit Suisse will be one of the few banks to cut compensation for the year as a whole.
Credit Suisse has had a challenging 2021 following a loss of $4.7bn relating to Greensill and a further loss of $5.5bn relating to Archegos. At last month's investor day, the bank announced a range of changes including cuts to the capital allocated to the investment bank and the closure of the prime broking business. Some banking analysts have suggested the cuts didn't go far enough, particularly as Credit Suisse is now intent on hiring for various roles across its investment bank.
Goldman Sachs announced the promotion of 643 managing directors in November, up from just 465 in 2019. If Credit Suisse also announces an unusually large MD class this year, it will increase the pressure on other banks to promote with similar abandon.
If it promotes a larger class of managing directors, Credit Suisse will increase its fixed costs. H1B salary information indicates that Credit Suisse hired U.S. managing directors on salaries of $350k in 2020. This year, however, it's hired a New York-based managing director on an H1B visa on a salary of $810k. That may be an anomaly, or it may reflect inflation and a very hefty risk premium.
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