Swiss government wants to rein in bank executives

The Federal Council wants to tighten the reins on bank executives Keystone-SDA

The Swiss government wants to hold bank executives more accountable and prevent risks arising from high bonuses.

Stricter regulations on this matter have been put out for public consultation that would also force banks to be better prepared for crises.

The aim is to close loopholes in the ‘too big to fail’ regulations, the Federal Council stated. It also wishes to reduce the risk that taxpayers, the economy and the state will once again have to bear financial risks such as those following the Credit Suisse debacle.

+ Where did it all go wrong for Credit Suisse?

The measures intend to enshrine a system of accountability in the Banking Act for banks with more than 250 employees. It is to be clearly defined and made transparent who is responsible for which decisions. This is intended to improve corporate culture and the culture surrounding risk management.

There should no longer be bonus incentives for unduly risky behaviour at banks, and a multi-year vesting period is therefore to be introduced for the payment of part of the variable remuneration to senior executives and very highly paid employees at all banks. It should also be possible to reclaim bonuses where appropriate.

FINMA is to be able to impose fines

The Swiss Financial Market Supervisory Authority (FINMA) is to be granted additional powers. Early intervention is intended to help protect the interests of banks’ customers. Its supervisory tools are to include, for the first time, fines for banks. These are to amount to up to 10% of a bank’s operating profit for a given year.

+How to tame UBS without making the bank toothless

The Federal Council intends to increase the scope and precision of the stabilisation and resolution plans for systemically important banks. Banks are also to be granted extended access to liquidity from the Swiss National Bank.

In the Liquidity Ordinance, the Federal Council intends, amongst other things, to set out minimum quantitative requirements for systemically important and medium-sized banks regarding secured liquidity facilities from the Swiss National Bank. Smaller banks are not affected by this.

The new provisions of the Ordinance are not due to come into force until the legislative amendments have been adopted and have entered into force.

The consultation on the amendments to the Banking Act and the Liquidity Ordinance runs until November 19. The Federal Council intends to submit the message on the Banking Act to parliament in 2027. The new requirements could come into force at the earliest in early 2029.

+ How we produce English news
Translated from German, reviewed by an English Department journalist.