ZURICH (Reuters) -A top Swiss court has ruled that the Swiss government’s reductions and cancellations of bonus payments to former executives of Credit Suisse after the bank failed in 2023 were unlawful, according to the ruling published late on Tuesday. The bonus measures affected around 1,000 people, some of whom challenged the decision with Switzerland’s […]
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Swiss court rules Credit Suisse bonus cuts were unlawful
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ZURICH (Reuters) -A top Swiss court has ruled that the Swiss government’s reductions and cancellations of bonus payments to former executives of Credit Suisse after the bank failed in 2023 were unlawful, according to the ruling published late on Tuesday.
The bonus measures affected around 1,000 people, some of whom challenged the decision with Switzerland’s Federal Administrative Court, which upheld their appeal.
“The variable remunerations reduced by the (Swiss finance ministry) were binding, employer-guaranteed claims deriving from a contractual employment relationship,” the court said. “Such contractual claims are protected by the guarantee of ownership.”
The ruling may be appealed to the Federal Supreme Court, the court said in a statement.
The finance ministry said it would analyse the ruling and consider lodging an appeal to the Supreme Court.
Credit Suisse collapsed in March 2023 and was taken over by its longstanding rival UBS in an operation orchestrated by Swiss authorities.
Acting upon the instructions of the federal cabinet, the finance ministry in May 2023 ordered Credit Suisse to reduce or scrap outstanding bonus payments for the bank’s bosses.
At the executive board level, bonuses were to be cut altogether. At the next two levels, they were reduced by 50% and 25%, respectively.
The measures were worth around 62 million Swiss francs ($74 million), according to the government.
UBS, which would have to pay out any restored bonuses, said it took note of the court’s decision.
The court’s decision is likely to be closely watched by other parties affected by the demise of Credit Suisse.
In the aftermath of the bank’s collapse, Swiss financial market regulator FINMA wrote down about $17 billion of Credit Suisse’s Additional Tier 1 (AT1) debt, angering bondholders.
A number of bondholders have since filed lawsuits against Switzerland seeking compensation for their losses.
($1 = 0.8390 Swiss francs)
(Reporting by Stefania Spezzati and Dave GrahamEditing by Sam Holmes and Louise Heavens)