Switzerland seeks to tighten rules on bankers' bonuses

Switzerland's government has begun discussions on new banking regulations that could potentially curb bankers' bonuses, aiming to bolster the nation's financial system and prevent risky behavior among senior executives. The Federal Council unveiled these consultations on Wednesday, citing the Credit Suisse collapse as a catalyst for change. The proposed measures seek to enhance corporate governance, prepare banks for crises, and empower the financial market supervisory authority (FINMA).

Finance Minister Karin Keller-Sutter emphasized that the focus lies heavily on bankers' bonuses, with potential measures including withholding or recovering these payments from top or highly paid managers at large banks in the event of rule-breaking or mismanagement. The goal is to discourage excessive risk-taking and ensure that remuneration is aligned with long-term profitability. The consultation process, which began at the end of August, is set to conclude by November.

This initiative follows a painful episode in March 2023 when the Swiss finance ministry, central bank, and FINMA had to intervene to avert Credit Suisse's bankruptcy, ultimately rescuing it by acquiring the troubled bank from its domestic rival, UBS. While UBS welcomed the takeover, the bank's executives are now pushing back against stricter capital requirements for its overseas subsidiaries, arguing that such measures could hamper its competitiveness.