Switzerland: Bonus payments: Parliamentary motion of May 3, 2023 wants to ban bonus payments to management of systematically important banks

On May 2, 2023, the National Council of the Swiss Parliament adopted a motion on bonus payments of systematically important banks. According to the motion, the Swiss government should be mandated to amend the legal basis for systematically important banks to the effect that no bonus payments may be made to the highest bodies and the operational and/or strategic management.

The requested ban on bonuses would affect, among others, the members of the Board of Directors and the CEO as well as the risk-management of systematically important banks. The background to the motion is the recent events at Credit Suisse, that show how bonus-driven incentive systems can promote an aggressive risk culture. In the case of systematically important banks, it is not only clients and shareholders that bear the financial risk of a neglect of risk and compliance systems, but also the state and the taxpayers. For banks that claim a direct or indirect state guarantee, the remuneration policy must therefore be reconsidered. Recent developments at some larger Swiss banks, which no longer pay variable compensation to their management, show that successful banking is also possible without bonuses.

After the National Council, the second chamber of the Swiss Parliament, the Council of States, must now decide on the motion. We will keep our clients informed about the further progress of the proposal.