Swiss Too-Big-to-Fail Reforms Target Senior Bankers’ Bonuses, Crisis Planning

Switzerland is proposing stricter rules for banks as it overhauls its too-big-to-fail framework after the Credit Suisse crisis.

The changes would make senior bankers more accountable, tighten rules on executive pay and give the Swiss Financial Market Supervisory Authority (FINMA) stronger enforcement powers.

Banks would also get broader access to liquidity from the Swiss National Bank (SNB).

Banks with at least 250 employees would come under a new senior managers regime.

They would have to clearly set out who is responsible for key decisions and business areas.

Tougher Bonus Rules for Senior Bank Executives

New pay rules aimed at limiting excessive risk-taking would apply across the banking sector.

Senior or highly paid executives at systemically important banks would also face longer holding periods for variable pay and clawback provisions.

FINMA could step in earlier when it sees governance problems or signs that a bank’s financial position is getting worse.

It would also be able to fine institutions for rule breaches and impose penalties when ordered measures are not carried out on time.

Stronger Crisis Planning and Liquidity Rules

Systemically important banks would face tougher requirements for recovery and resolution planning.

The proposals would also make it easier for banks to prepare and transfer collateral when seeking SNB liquidity.

Systemically important banks would face minimum requirements, while category 3 banks would follow a risk-based approach. Smaller category 4 and 5 banks would not be affected.

The Federal Council opened a consultation on changes to the Banking Act and Liquidity Ordinance on 12 August. It runs until 19 November 2026.

Credit Suisse collapsed in March 2023 after a crisis of confidence and was taken over by UBS in a government-backed rescue.

The episode prompted Switzerland to review gaps in its existing too-big-to-fail rules.

Featured image: Edited by Fintech News Switzerland, based on image by Nadia Vasil’eva via Pexels

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