Salary caps for bankers rejected in parliament

The Senate has thrown out proposals to limit bank salaries and restructure major banks, put forward in a bid to reduce risk in the financial sector and the economy.

A majority in the Senate on Tuesday voted against plans by the House of Representatives to split up banks’ business activities at home and abroad.

It also rejected setting caps for bonuses and bankers’ and board members’ pay, and plans for a government seat in companies benefitting from state funds, notably the struggling UBS bank.

Instead, the Senate wants the state to supervise the salary structure of such firms and their practice of good governance rules.

Several speakers, mainly from the centre-left, came out in favour of tighter regulations in line with the House of Representatives and taxpayers’ expectations. But a majority of centre-right and rightwing senators warned against shackling the financial industry.

“Switzerland and our financial centre must not suffer. On the contrary it has to be strengthened through the regulations,” said senator Eugen David.

Finance Minister Hans-Rudolf Merz said it was key that banks remained competitive. Important steps had been taken to improve rules, including the protection of client assets and increase the equity capital of banks, he added.

UBS posted record losses last year as a result of the global financial crisis and the crash of the property market in the United States. The government granted a multi-billion bailout package for Switzerland’s second-largest bank which is also involved in a legal dispute with the US authorities over alleged tax fraud.

Urs Geiser, swissinfo.ch