Swiss seen unveiling new bank bonus rules on Wed

The Swiss government is expected to unveil less tax-friendly rules for large corporate bonuses as early as Wednesday.

Swiss seen unveiling new bank bonus rules on Wed

The Swiss government is expected to unveil less tax-friendly rules for large corporate bonuses as early as Wednesday after several Swiss parties voiced concern at excessive pay packages at the country's largest banks.

Constraint on bonuses could also help end a parliamentary deadlock that risks killing a crucial settlement that Berne agreed last August with the United States to end a damaging tax evasion probe into bank giant UBS.

The government holds on Wednesday its regular weekly meeting and several political sources said they expected an announcement.

"There will be a proposal, everybody expects that," said Marianne Binder, a spokeswoman for the Christian Democrat Party, the country's fourth-largest party.

The debate on large bonuses has heated up in Switzerland after UBS gave fat pay cheques to some top investment bankers despite reporting its second consecutive annual loss in 2009.

But Credit Suisse is also in the line of fire after Chief Executive Brady Dougan cashed in more than 70 million Swiss francs ($65 million) due to the expiry of an option plan.

The Christian Democrats published on Tuesday a document demanding "targeted measures against the continuous excessive and shocking bonuses in the financial industry."

These would include a shareholder say on pay packages and less tax deductibility for bonuses.

 

UBS deal in danger 

These calls came on top of demands by the Social Democrats, the country's second-largest political fraction, which says they won't back the UBS settlement in parliament unless they get new rules on bonuses and a strengthening of already strict bank capital rules for both UBS and Credit Suisse.

The party is calling for an additional 8.5 percent tax on income above 1.0 million francs a year and would like any losses linked to toxic assets still on UBS books to be met by the bank.

"Should these measures not be included, socialist members of parliament will not support the agreement between Switzerland and the U.S.," said spokesman Andreas Kaesermann.

The parliament will vote on the UBS tax deal early in June and a poll published by daily Tages-Anzeiger on Monday showed that 54 percent of those polled want the parliament to reject the UBS deal even if that could damage the Swiss economy.

A spokesman for the Swiss Finance Ministry declined to comment on whether the government was planning new bonus rules.

But Foreign Minister Micheline Calmy-Rey, Justice Minister Eveline Widmer-Schlumpf and President Doris Leuthard all signaled their willingness to act on bonuses at interviews to Swiss media in the past few days.

The ultra-nationalist SVP Party, the country's largest, has already said it will vote against the UBS tax deal, but cannot kill the settlement in parliament on its own.

In a further sign that new rules on bonuses are imminent, the Lower House's Committee for Economic Affairs and Taxation postponed its recommendation on the UBS deal to May 21.

And the Liberal Party of Finance Minister Hans-Rudolf Merz, normally in favour of free markets, issued a statement on Monday in which it too criticised excessive compensation and advised Credit Suisse investors to reject the bank's bonus plan at the shareholder general meeting on April 30.

Reuters

Last Mod: 27 Nisan 2010, 19:17
Add Comment