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Regulator defends UBS bonus decision

The financial regulator has defended a decision to allow the country's largest bank, UBS, to hand out SFr2 billion ($1.73 billion) in bonuses to its employees.

On Monday, leftwing politicians and consumer associations criticised the Federal Financial Market Supervisory Authority (Finma) for giving permission for the bonus scheme despite billions in UBS losses in 2008.

In an interview with a Swiss television programme on Monday evening, Finma's president, Eugen Haltiner, said the move was a responsible one.

He said the payments, equating to roughly SFr26,000 for each of UBS's 77,000 employees, were necessary to keep the bank's employees from leaving.

UBS had originally sought to pay out more than SFr3 billion.

But the head of the Consumer Protection Foundation, Sara Stalder, said the regulator needed to act on behalf of bank clients, and not only financial institutions.

The centre-left Social Democratic Party called on Haltiner to resign.

UBS is negotiating with Finma on a revised compensation programme that would have managers receive bonuses only if the bank turned a profit. It is to be introduced in the second quarter of 2009.

In 2008, UBS wrote down $49 billion and turned over around $60 billion in toxic assets to the country's central bank. The Swiss government also agreed to inject SFr6 billion of fresh capital into UBS in exchange for a 9.3 per cent stake.

UBS still expects to lose SFr8 billion in the fourth quarter of 2008.

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