Swiss Bankers Face Mandatory Bonus Deferral Under Reform

(Bloomberg) — The Swiss government wants to enshrine in law the deferral of top bankers’ bonuses for a number of years, as part of a package aimed at shoring up financial regulation following the collapse of Credit Suisse.

The measure would apply to the biggest banks, including UBS Group AG, and could entail between 40% and 60% of variable pay being retained for as long as five years, according to proposals released by the government on Wednesday.

“Short-term returns at the expense of financial stability must not pay off,” Finance Minister Karin Keller-Sutter said in Bern.

The measures would go beyond the current principles-based system which recommends delaying some variable pay. Other major jurisdictions, such as the UK, implement a mandatory deferral of senior bankers’ bonuses, on the basis that it takes several years for the consequences of decisions, or potential misconduct, to become clear.

UBS, Switzerland’s biggest bank by far, has long implemented a deferred bonus system which takes account of performance and share-price development as well as potential misconduct or regulatory clawbacks. For executive board members, up to 80% of bonuses are at risk of forfeiture for up to a period of five years, according to the 2025 annual report. For relevant managing directors, the deferral period is an average of 3.8 years.

Earlier this year Swiss lawmakers rejected a separate plan to ban banker bonuses altogether.

The Federal Council unveiled the bonus deferral proposal — which still needs broad consultation and submission of a draft to parliament — alongside measures to strengthen to role of Finma, the nation’s financial watchdog. A separate process is also in place relating to capital regulations affecting UBS.

The government proposes to give Finma the power to subject banks to coercive fines — potentially daily — in the event that they don’t comply with regulatory decisions. That capacity would come alongside the right to issue administrative fines, of as much as 10% of annual operating revenue, for cases in which banks are deemed to have broken the law or infringed regulations. Switzerland doesn’t currently have either ability, in contrast to most major global regulators.

The regulator should also be able to publicly name financial institutions which have been subject to enforcement proceedings, according to the proposal. A further measure would, in severe cases, remove the ability of banks to delay the application of regulatory orders by submitting legal challenges, and instead make application immediate.

Switzerland’s financial supervisor has faced criticism for being too lenient on banks in the years preceding the collapse of the Credit Suisse in 2023, and is seeking new powers to more effectively police firms. The authority’s new Chief Executive Officer, Stefan Walter, has boosted the on-site checks Finma staff are carrying out at financial institutions and has pushed for more tools for early intervention.

Keller-Sutter said that additional powers for Finma are “no magic potion,” but necessary to decrease the probability of a big Swiss bank coming close to failure again.

“In the case of UBS, we must do everything in our power to prevent that we come into such a situation,” she said.

Finma and the Swiss National Bank welcomed the planned changes. The measures are “crucial” to remedy weaknesses exposed by the Credit Suisse crisis, the SNB said.

Stakeholders including the financial industry and interest groups can now comment on the measures, with a draft bill expected to be put to parliament next summer. The changes are expected to take effect at the beginning of 2029 at the earliest, according to the government.

–With assistance from Myriam Balezou and Isabella Farr.

(Updates with minister, reactions from third paragraph.)

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