Under the plan, Credit Suisse is to give its top bankers shares in a new $5bn fund of illiquid assets. The move is intended to link pay to the long-term performance of credit markets and limit the bankâ??s exposure to the securities.The assets in the fund are believed to be marked down heavily, to an average of 65 per cent of their original value, thus making it likely that they would appreciate in value when credit markets recover during the next few years.
The plan will probably face opposition from people who were not involved in mortgages and leveraged loans.
The new system would allow Credit Suisse to avoid making further writedowns on those illiquid assets because any mark-to-market gains or losses on the securities would be offset by corresponding losses or gains on its liabilities to employees.
It is planned that bankers receiving such equity will not get any payments for at least five years and will only receive the bulk of the money after eight or nine years.
