Credit Suisse bankers will have their bonuses linked to tarnished assets, making employees take on the risky assets some of them put on the Swiss bank’s balance sheet.

Senior executives of the troubled bank, which is cutting 11 per cent of its workforce, will have their bonus pay-outs linked to about $5 billion (£3.2 billion) in illiquid assets such as leveraged loans and mortgage securities. These products have been credited with contributing to the current credit squeeze.

The announcement follows criticism of the bonus culture, in the wake of the global financial crisis, which was rewarding bankers for taking on irresponsible risks.

Brady Dougan, chief executive of Credit Suisse, and Paul Calello, head of its investment banking operations, said in a memo to employees: “While the solution we have come up with may not be ideal for everyone, we believe it strikes the appropriate balance among the interests of our employees, shareholders and regulators and helps position us well for 2009.”

Mr Dougan and Mr Calello have already said that they will forgo bonuses for 2008, along with the Credit Suisse chairman.

Investment bankers at Credit Suisse are also at risk of losing their jobs soon. Credit Suisse said this month that it was cutting 11 per cent of its workforce, or 5,300 jobs, worldwide, mainly in investment banking, after making a net loss of about SwFr3 billion (£1.7 Billion) in October and November.

About 20,000 staff are employed by Credit Suisse’s investment banking operation.

Credit Suisse will be able to cut its risk exposure through the new system because any gains or losses on the assets will be offset by corresponding losses or gains on its liabilities to employees.

Investment bank managing directors and directors will receive 70 to 80 per cent of their bonuses in partner asset facility (PAF) units that “will be linked to the performance of a pool of illiquid assets”. The rest of their bonus will be in cash that, in some circumstances, must be returned.

Credit Suisse will back about 85 per cent of the value of the portfolio, meaning employees and any outside investors would be be exposed to the first 15 per cent of losses. The portfolio will have fully matured in about eight years.

It is understood that bankers receiving the new style of bonuses will not receive any payments for at least five years and will receive the bulk of the money only after eight or nine years, a far cry from the bonus culture in some banks in the past few years.

It is thought that they will receive a dividend of 2.5 per cent over Libor twice a year. If bankers leave within a year, they keep one-third of their equity in the new system, two thirds if they stay two years and the whole amount if they remain for three years.

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