In a significant move to bolster its regulatory framework, Switzerland’s financial watchdog, FINMA, is pushing for the authority to claw back bankers’ bonuses. This comes after the recent upheaval surrounding Credit Suisse’s downfall and subsequent sale to UBS.
Marlene Amstad, the Chairwoman of FINMA, emphasized the urgency of this issue in a recent interview with Schweiz am Wochenende. She highlighted the longstanding problem where banks like Credit Suisse have accumulated losses while still dishing out hefty bonuses to their executives.
Gaps In FINMA’s Oversight
The Credit Suisse debacle exposed significant gaps in FINMA’s oversight capabilities. Critics lambasted the regulator for its inadequate response, prompting calls for enhanced powers. Among FINMA’s wishlist is the ability to issue fines, disclose enforcement details, and impose specific responsibilities on senior bank executives. Interestingly, these proposed reforms mirror regulatory frameworks already in place in countries like Britain.
However, Amstad clarified that FINMA’s limitations stem from legislative constraints, with the onus now shifting to the Swiss parliament for potential reforms. She underscored the need for punitive measures and appropriate incentives in remuneration structures.
See Related: Swiss Watchdog FINMA Advocates For Stronger Powers After Credit Suisse’s Near-Imploding Crisis
FINMA’s Reforms
One noteworthy aspect of FINMA’s proposed reforms is the emphasis on transparency. Amstad believes that publicizing FINMA’s enforcement actions would enhance accountability and serve as a deterrent against malpractices.
While FINMA aims to influence banks’ remuneration models, Amstad was quick to clarify that their role isn’t to dictate salaries. Instead, they seek more robust legal mechanisms to intervene in remuneration systems effectively.
Credit Suisse And Regulations
The unfolding developments at FINMA reflect a broader global trend toward strengthening financial regulations, particularly concerning executive remuneration. Switzerland’s traditionally stringent confidentiality norms have often shielded regulatory actions from public scrutiny.
The Credit Suisse episode serves as a wake-up call, highlighting the imperative for greater transparency and accountability. As FINMA endeavors to redefine its regulatory landscape, the international finance community watches closely, anticipating whether Switzerland will set a new precedent in balancing financial secrecy with robust oversight.
