Swiss regulator unveils its plans for banker pay
Switzerland’s largest banks and insurers will have to defer the bulk of managers’ bonuses and better match pay to performance under new rules aimed at curbing risky investments.
Swiss financial regulator FINMA had planned to impose the rules on the vast majority of the financial sector, but watered down its original proposals after industry lobbies said it could harm smaller firms.
“We welcome the fact FINMA has differentiated between the different banks so that the smaller banks are less affected,” said the Swiss Bankers Association.
The new rules, to come into force on 1 January 2010, place Switzerland in a growing group of countries moving the focus of compensation away from a short-term culture blamed for the financial crisis towards longer-term sustainable profitability.
“Remuneration schemes can create false incentives which may lead to inappropriate risks being entered into, threatening the business and profitability of a financial institution and, at the end of the day, its stability,” regulator FINMA said.
The new rules are expected to apply to UBS, Credit Suisse and also large insurers such as Swiss Life, Swiss Re and Zurich Financial Services.