Switzerland launched a public consultation on Wednesday on tougher banking regulations that would include stricter rules on bonuses at UBS (UBSG.S) in a bid to boost financial stability following the 2023 collapse of Credit Suisse.
Under the draft proposals, banks would be required to structure bonus schemes to reward long-term, sustainable performance and discourage excessive risk-taking, the government said, with stricter rules for systemically important lenders such as UBS, Switzerland's only remaining global bank following its takeover of Credit Suisse.
"The rules are designed to promote the positive development of an institution over the long term, and to counteract unfavourable risk behaviour," the government said.
The government sketched out the rules last year, as part of Switzerland's overhaul of its "too-big-to-fail" measures launched in response to the demise of Credit Suisse, which dealt a heavy blow to Swiss banking.
Lawmakers are already debating related proposals aimed at rendering the banking system more robust by making UBS hold more capital.
Under the bonus proposals, a significant portion of variable compensation must be deferred for top executives and high earners for several years, the government said, noting that internationally, this typically meant four to five years.
If misconduct or losses emerge during the deferral period, banks will be required to reduce or cancel outstanding bonuses. Paid-out bonuses could also be clawed back in cases of proven wrongdoing.
Under the proposals set out on Wednesday, banks with at least 250 employees would have to clearly assign responsibility for key decisions to senior managers.
Market regulator FINMA would also gain powers to intervene earlier when risks emerge, impose fines on institutions and levy penalties for delays in implementing supervisory orders.
The plans also bolster requirements for systemically important banks' stabilisation and resolution planning.
They also envisage simplifying the transfer of collateral to the Swiss National Bank, with the purpose of supporting banks' ability to obtain central bank liquidity in a crisis.
The consultation runs until November 19, 2026.
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