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Even if Credit Suisse MDs are made redundant, it appears that in 2016 around 2,000 of them will each receive £2.9m

Yesterday, we relayed a rumour that Credit Suisse is thinking of getting rid of 30% of its investment banking MDs soon. Today, we would like to suggest that many of them won't really mind. In 2016 they will be rich anyway.

Come 2016, the 2,000 senior staff who each received an allocation of the original toxic asset partner asset facility (PAF) bonus scheme will be able to sell their holdings for the first time. When the PAF allocations were made, back in 2008, Credit Suisse said the contractual term of the scheme would be eight years.


"In the final year of the contractual term, the PAF holders will receive a final settlement in cash equal to the notional value, less all previous cash payments made to the PAF holder, plus any related gains or less any related losses on the liquidation of the Asset Pool."

Fortunately, there have not been any losses on the original PAF bonuses. But there have been big gains. In January Bloomberg said the gains had been 75%. Yesterday, Reuters said the gains have been 80%. With the original PAF pool worth $5bn, this implies a current value of $9.09bn. If this is shared equally between the 2,000 MDs, each of them will receive $4.5m (£2.9m) in four years' time.

It would clearly be upsetting to be made redundant from Credit Suisse before 2016 and to lose all entitlements to this great windfall. However, the wording of Credit Suisse's 2008 compensation report suggests this won't happen.

"All PAF awards remain subject to non-compete/non-solicit provisions that expire in respect of one-third of the awards on each of the three anniversaries of the grant date," it says.

By the end of 2011 the implication is that the £2.9m no longer had strings attached: recipients would just have to wait until 2016 to receive it and this would come to pass whether they were still working for Credit Suisse or not.

Suddenly, redundancy doesn't look so bad after all.

In the meantime, Reuters reported yesterday that PAF recipients can buy a few more of Credit Suisse's risky assets if they feel like it: the bank is giving them the option to plough $1bn of their profits back into the scheme.

AUTHORSarah Butcher Global Editor

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