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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 Swiss bank decided to pay employee bonuses for 2008 with illiquid leveraged loan and CMBS debt that no-one else will touch with a bargepole.

Investment banking chief executive Paul Calello admitted 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).

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. And remember – these are the people that Credit Suisse actually wants to keep.

"Fucking hysterical," snapped one employee at the bank. "They can’t sell it so they give it to the staff! You might think it’s funny but we are not laughing here..." But given where these assets are now marked, if liquidity returns, the unfortunate recipients of this largesse could end up having the last laugh after all...