Credit Suisse Bought Protection on Derivatives Linked to Bonuses

Credit Suisse Group AG purchased protection on derivatives the bank used to award more than 5,500 employees part of their 2011 bonuses.

The bank bought a credit default swap from a third party to hedge the $11 billion senior tranche of derivatives against the potential for future swings in counterparties’ credit spreads, the Zurich-based company said in its first-quarter report today. Credit Suisse also has an agreement with the same unidentified entity that requires the bank to provide funding to it in “certain circumstances,” it said.