Swiss government proposes mandatory bonus deferral for bankers after Credit Suisse collapse

Switzerland wants to make sure its bankers earn their bonuses before they can spend them. The Swiss Federal Council has proposed enshrining mandatory bonus deferrals for top banking executives into law, part of a sweeping regulatory overhaul triggered by the spectacular collapse of Credit Suisse in March 2023.

The proposal sits within a broader package of reforms to the country’s “Too Big To Fail” regime, targeting the compensation structures, capital requirements, and resolution planning of systemically important banks.

What the Swiss are proposing

On June 6, 2025, the Federal Council released a factsheet outlining parameters for its TBTF reforms, including tighter regulations on variable remuneration. The key mechanism is straightforward: top executives at systemically important banks would have their bonuses held back for a number of years rather than paid out immediately.

Beyond deferrals, the reform package also seeks to strengthen clawback and malus mechanisms. Clawback lets a bank recover bonuses already paid out. Malus allows a bank to reduce or cancel deferred awards before they vest. Together with mandatory deferrals, these tools create a layered system designed to make executives share more downside risk with shareholders and taxpayers.

The Federal Council adopted a revision to the Banking Act on April 22, 2026, primarily addressing capital adequacy requirements for foreign subsidiaries of Swiss banks. The compensation-related proposals are expected to follow as subsequent measures in a staged rollout.

The Credit Suisse aftermath

Credit Suisse’s March 2023 collapse remains the defining event behind these reforms. The bank was acquired by UBS in a government-backed deal, effectively creating a single dominant megabank in Switzerland and concentrating systemic importance in one institution to a degree that made even seasoned regulators uneasy.

FINMA, Switzerland’s financial market supervisory authority, already had circulars addressing remuneration practices at major banks. The new proposals would elevate key provisions into statute, giving them legal teeth that are harder to circumvent or water down during good times when memories of crises tend to fade.

Swimming against the current

What makes Switzerland’s move particularly notable is the direction it’s heading relative to other major financial centers. In October 2025, UK regulators actually reduced bonus deferral periods for senior bankers, loosening rules that had been in place since the post-2008 reform era.

Switzerland is moving in the opposite direction. While London relaxes, Bern tightens. The contrast highlights a fundamental tension in global financial regulation, as each jurisdiction calibrates its rules based on recent experience.

Investors watching Swiss bank equities should pay attention to the staged rollout. Each phase of the TBTF reform package has the potential to affect operating costs, talent retention, and risk appetite at institutions like UBS. The capital adequacy requirements for foreign subsidiaries, already adopted, could force structural changes in how Swiss banks organize their international operations.