Cancellation was unlawful Bonuses of former Credit Suisse managers may not be reduced

The reduction or even elimination of bonuses for the top three management levels of Credit Suisse ordered by the Federal Department of Finance was unlawful. The Federal Administrative Court has upheld the joint appeal of twelve affected parties.

Keystone-SDA

13.05.2025, 22:50

SDA

After the federal government granted Credit Suisse loans to secure liquidity in March 2023, the Federal Council instructed the Federal Department of Finance (FDF) in its emergency ordinance of March 16, 2023 to take measures in the area of remuneration in accordance with Article 10a of the Banking Act. This is the result of a ruling by the Federal Administrative Court published on Wednesday.

On May 23, 2023, the FDF subsequently ordered Credit Suisse to reduce or cancel outstanding bonus payments - known as variable remuneration - across the Group. They were to be canceled for the top management level and thus the Executive Board, reduced by 50 percent for the level directly below the Executive Board and by 25 percent for the level two levels below the Executive Board.

Some of the 1,000 or so people affected lodged an appeal with the Federal Administrative Court. The court ruled on the appeal in a pilot judgment. According to the court, four further appeals are still pending and will be suspended until the pilot ruling is legally binding.

Unlawful prohibition of payment

In its ruling, the Federal Administrative Court stated that the reduced remuneration was a bindingly guaranteed claim by the employer arising from an employment contract. Such claims are protected by the guarantee of ownership. The guarantee of property is in turn guaranteed by the constitution. A clear and explicit basis in a law is necessary for serious interference with such claims.

According to the Federal Administrative Court, Article 10a of the Banking Act does not contain such a basis. The law only stipulates that measures are permitted for the duration of the state aid claimed. The wording of the law limits the time horizon to the duration of the claimed support. They could therefore only be of a temporary nature.

All state aid to Credit Suisse ended on August 11, 2023 at the latest. However, the FDF had ordered that the remuneration of the employees concerned would have to be reduced or canceled permanently and thus beyond the duration of the state aid. This order is much more serious than a temporary ban on payments and is not provided for by law. According to the court, the FDF's order is therefore unlawful.

No question of responsibility

As the Federal Administrative Court further explained in its considerations, the measures set out in the Banking Act in the area of variable remuneration do not constitute sanctions for misconduct by employees of the bank affected by the state aid. The question of the responsibility of the managers concerned is therefore not legally relevant.

Nevertheless, the FDF and UBS, which took over Credit Suisse, had argued across the board that the reduction or deletion was justified because the persons concerned had belonged to the top three management levels of Credit Suisse and were therefore responsible for the complete failure.

Neither the FDF nor UBS had been able to provide concrete evidence that even one of the twelve managers had caused excessive risks and thus the financial situation of Credit Suisse through their actions or omissions contrary to their duties. None of the managers affected by this judgment belonged to the top management level.

The judgment is not yet final and can be appealed to the Federal Supreme Court. (Judgment B-3655/2023 of 31.03.2025)