LONDON, Jan 3 (Reuters) - Credit Suisse CSGN.VX is preparing to offload more risk exposure to staff in its 2012 bonus giveaway but significantly fewer managers will be allowed to join the latest version of a scheme that has yielded stellar rewards in previous years.
Pioneered in 2008, Credit Suisse's ground-breaking asset-backed bonus schemes pay managers a portion of their bonuses in financial instruments whose value depends on the performance of risky assets that the bank is exposed to.
The creation of a new Credit Suisse scheme comes as banks bow to the demands of shareholders and regulators to move away from cash bonuses in favour of alternatives that are more aligned with the risks bankers are taking.
Two earlier schemes have helped the bank to transfer $17 billion of troubled loans and derivatives off its balance sheet, improving its capital position since capital demands are directly related to the size of a bank's balance sheet.
The schemes have also allowed the bank to save about $1.4 billion on cash or share-based bonus payments.
Staff, who are not given a choice about how they receive their bonuses, can reap sizable rewards if the underlying assets do well and have already enjoyed massive paper profits on one of the schemes, though they can't get their money until 2016.
Sources at Credit Suisse told Reuters the bank was preparing to launch a new, slimmed-down scheme for 2012's year-end bonuses. Credit Suisse declined to give any information on the size of the scheme.
A spokesman for Credit Suisse confirmed the bank sent an email to eligible staff last week signalling the creation of a third scheme, to be called the 'Plus Bond'.
It should be noted that the Plus Bond program has an 'option' whereas the participants can elect to receive compensation in the form of drugs and young asian/mexican children in lew of cash. It's worth pointing out that most 'participants' in previous bonus plans elect the drugs and children.