Deutsche Bank has radically cut bonus payments to its managers and Italy's Unicredit recently reduced salaries. It would make a lot of sense for Credit Suisse to follow suit.

The final verdict is here: Credit Suisse (CS) has to pay $5.28 billion to compensate for its role in respect to the sale of mortgage-backed securities, which the Department of Justice says helped cause the financial crisis of 2008. The payment means that Switzerland's second-biggest bank will probably post a loss of about 2.5 billion francs in 2016, according to analysts' estimates.

Deutsche Bank agreed to an even higher compensation payment of $7.2 billion. That in turn will lead to a loss of about 1 billion euros – the German bank in 2015 had a record loss of almost 7 billion euros.

Cuts, Cuts, Cuts

It comes as little surprise then that Deutsche CEO John Cryan is applying the brakes. He told his bankers on Wednesday that the vice presidents, directors and managing directors would not receive any individual bonus component for the past year.

The cut in bonuses affects only about 25 percent of the bank's staff. But the management still qualified the measure as «tough».

The executive of 11 top managers will of course not get a variable bonus either and the bonus pool will be roughly half of what it used to be – Deutsche Bank in 2015 spent about 2.4 billion euros on bonuses.

No Profit – No Bonus?

Given the precedence from Germany, all eyes are now on Credit Suisse. With the expected loss, it would make a lot of sense to wield the axe – if a bank doesn't earn any money, there's nothing to distribute, one might think. CS in 2015 had a loss of 2.9 billion francs.

CS CEO Tidjane Thiam himself expects a «reasonable year» in respect to compensation, according to an interview with «Bloomberg». He claims the bank had made strides in the right direction in 2016 and that the bank traditionally rewarded good work, adding that the supervisory board was responsible for the bonus payments.

The wording Thiam used suggests that managers at CS won't have to brace for extra tough bonus cuts. The communications department of the bank refused to be drawn on the statements and said that bonuses would be made public on March 24.

Give and Take

CS paid its staff a variable salary component of 2.9 billion francs for 2015 – pretty much the same number it posted as a loss. Thiam personally received 4.6 million francs, in addition to 14.3 million in shares to compensate for leaving Prudential.

The bonuses at group level had been cut by 11 percent from a year earlier, but the cuts were compensated through higher fixed components and other variable payments.

Urgent Reaction

Italy's Unicredit recently decided to reduce salaries because of the difficulties of the bank. CEO Jean-Pierre Mustier for instance asked the supervisory board to cut his wage by 40 percent.

The measures taken by Deutsche and Unicredit are signs that the banking industry is able to react in times of difficulties. And this is much called for. It is unlikely that the markets will turn dramatically, helping banks to generate billions in extra profit soon.

Little Pressure From Investors, so Far

Surprisingly, there is little pressure from investors on banks to cut wages. This at least is very much the case for Credit Suisse. The world's biggest asset manager, Blackrock, recently said it would fight excessive salaries for managers – starting with U.K. companies, according to a report by «The Guardian».

The Blackrock approach may however extend to other countries – for instance to Switzerland. Blackrock owns 3 percent of CS.