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.
