In a fiendishly clever plan, Credit Suisse Group AG has found a way to reduce its exposure to toxic securities and transfer risk off its balance sheets–it’s paying senior executives’ bonuses with them.
Managing directors and directors, the two highest ranks at the Zurich-based company, will be paid year-end bonuses in its most illiquid loans and debt. Those assets will be transferred to a “Partner Asset Facility,” and those directors will receive shares of ownership in the facility. Those assets will make semi-annual payments to the owners, with the full value only to be known as the assets mature or default.