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Massive salaries enter government cross hairs

The Swiss finance ministry has confirmed it is considering ways to combat excessive salaries paid out by the banking sector.

It is examining a proposal that would no longer treat high salaries as a normal part of the business and deductible from a bank’s net profit.

The idea stems from Anita Fetz, a parliamentarian with the centre-left Social Democrats, who proposed a motion calling for salaries of more than SFr1.5 million ($1.42 million) to no longer be tax deductible. This was rejected by the government in February.

However, the Senate's Committee for Economic Affairs and Taxation wasn’t convinced by the government’s position and at the end of March asked the finance ministry to re-examine the issue.

In the meantime Finance Minister Hans-Rudolf Merz had a change of mind and is said to be ready to give the proposal another look.

On March 31 Credit Suisse rekindled the debate on executive pay by awarding its managers shares worth over SFr3 billion. CEO Brady Dougan led the way among the 400 executives and managers by receiving shares worth around SFr71 million under a five-year bonus plan.

Credit Suisse made it through the financial crisis without state aid despite a hefty loss in 2008 and returned to a handsome profit in 2009, unlike rival UBS, which had to be bailed out by the government and still lost money last year.

In 2009, UBS paid its investment banking co-chief more than SFr13 million – mainly in bonuses – after the bank booked a pre-tax loss of SFr6 billion, against a loss of SFr34 billion the previous year.

swissinfo.ch and agencies


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