Credit Suisse rose the most in two years after it announced fresh measures to boost capital buffers, including plans to increase asset reductions and give investors the option of receiving their dividend in shares.

Shares rose as much as 5.3 per cent to 20.84 francs at 9:16am in Zurich trading. The stock is down 17 per cent so far this year, compared with a 0.9 per cent increase in the 49-member STOXX 600 Banks Price Index.

Switzerland’s second-biggest bank returned to profit in the fourth quarter, posting 921 million francs (€874 million) in net income, compared with a 476 million-franc loss in the year-earlier period.

The lender cut bonuses for the group and the executive board.

Chief executive officer Brady Dougan has been scaling back the investment bank and selling real estate to boost Credit Suisse’s capital buffers, hurt last year by a $2.6 billion fine for helping Americans evade taxes.

The prospect of stricter leverage requirements in Switzerland have raised questions about the strength of the bank’s balance sheet while earnings are under pressure from the surging franc.

“People would react well to the improved leverage ratio,” said Jon Peace, an analyst at Nomura Holdings in London. “Credit Suisse seems to be able to mitigate the impact from the Swiss franc.”

The board of directors agreed to cut its compensation by 25 per cent, while performance-related pay for the executive board was cut by an equivalent of 20 per cent of the amount that would have otherwise been granted, split between the current and prior year awards, the bank said.

Credit Suisse said it cut bonuses for the group by 9 per cent to reflect stable pretax profits and the US tax fine.

“We did feel it was right to acknowledge the impact of the settlement on the earnings and as a result the board as well as the executive board voluntarily took these reductions in compensation,” Mr Dougan said.

Bloomberg