Switzerland launches consultation on stricter bonus rules for banks
The measures will boost financial stability following the 2023 collapse of Credit Suisse
Switzerland announced on Wednesday a consultation period on new banking regulations aimed at enhancing financial stability in the aftermath of Credit Suisse's 2023 collapse. The proposed measures would impose stricter bonus rules for major banks, particularly those deemed systemically important, such as UBS, Switzerland's sole remaining global bank.
The government intends to structure bonus schemes to incentivize long-term, sustainable performance and discourage excessive risk-taking. Draft proposals suggest that a significant portion of variable compensation for top executives must be deferred for several years, typically four to five years internationally. Banks with 250 or more employees would be required to clearly assign responsibility for key decisions to senior managers.
The financial market regulator, FINMA, would also gain earlier intervention powers when risks emerge, impose fines, and levy penalties for delays in implementing supervisory orders. Moreover, the plans include enhancing stabilisation and resolution planning for systemically important banks and simplifying the transfer of collateral to the Swiss National Bank to bolster their liquidity during a crisis. The consultation period for these proposals will run until November 19, 2026.
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