Switzerland moves to tighten bankers' bonuses

Switzerland's government launched consultations Wednesday on new banking rules that could limit bankers' bonuses, drawing on lessons from the collapse of Credit Suisse.

The Federal Council said the consultations would cover measures to strengthen corporate governance, improve banks' crisis readiness and give greater powers to the financial market supervisor FINMA.

Finance Minister Karin Keller-Sutter said the aim was to strengthen resilience and confidence in the Swiss financial system while protecting the economy, taxpayers and the state.

The proposals focus in part on remuneration. They would allow bonuses to be withheld or recovered from the most senior or highest-paid managers at systemically important banks in cases of rule-breaking or mismanagement.

Keller-Sutter said the government wanted remuneration to be geared toward long-term profit. The consultation is due to start in late August and run until November.

In March 2023, the finance ministry, the central bank and FINMA arranged an emergency solution for Credit Suisse as it neared bankruptcy, resulting in a takeover by UBS.

Because UBS became larger after the merger, the government wants the bank to strengthen its capital base so it can withstand a crisis or market shock. It particularly wants tighter capital requirements for overseas subsidiaries.

UBS executives oppose that capital plan, arguing it would undermine the bank's competitiveness.