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All I want for Christmas is some triple-B CMBS

For those senior bankers bemoaning the fact that they were not awarded a bonus this year take heart – things could be worse. You could be working for Credit Suisse.

The good news is that the Swiss bank decided to pay employee bonuses for 2008. The bad news is that they decided to pay them with illiquid leveraged loan and CMBS debt that no-one else will touch with a bargepole.

In something of an understatement, investment banking chief executive officer Paul Calello admitted in an internal memo that the solution “might not be ideal for everyone”. But the bank should be commended for its fresh approach to the concept – making bonuses something that employees actually want to receive is just so last year. The scheme applies to managing directors and directors only but who gets what remains a mystery. Maybe securities backed by city-centre buildings with solvent highly rated tenants are being reserved for blameless managers in wealth management. If so those in structured finance and leveraged finance should brace themselves for a deluge of triple-C paper backed by deserted shopping malls in nowheresville, Tennessee (staff will actually be given equity stakes in a dedicated fund).

According to the memo the ultimate value of the bonuses that employees receive will be determined over the next eight years “as the loans and securities mature or default” – not exactly a ringing endorsement of their quality.

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