Switzerland Launches Consultation on Mandatory Bonus Deferrals for Bankers, While UBS Capital Fight Drags On

Switzerland is telling its bankers: prove it before you profit from it.

The Federal Council launched a public consultation on Wednesday, August 12, 2026, on tougher banking regulations that would force executives at systemically important banks to defer a large chunk of their bonuses for years, according to Reuters. If losses or misconduct surface during that deferral window, banks would have to cut or cancel the unpaid bonus. Money already paid out could be clawed back if wrongdoing is proven.

The government said the goal is straightforward: reward long-term performance, discourage reckless risk-taking. Internationally, deferral periods for this kind of pay typically run four to five years, the government noted.

This isn't a standalone idea. It's the compensation piece of Switzerland's broader "too big to fail" overhaul, launched after Credit Suisse collapsed in March 2023 and got swallowed by UBS in a government-engineered rescue. That merger left Switzerland with exactly one global bank. Regulators have been visibly uneasy about that concentration ever since.

What's actually in the consultation

Banks with at least 250 employees would have to clearly assign responsibility for major decisions to specific senior managers, according to Reuters. No more diffuse accountability when something blows up.

FINMA, the Swiss financial regulator, would get more teeth: power to intervene earlier when risk builds up, authority to fine institutions directly, and penalties for banks that drag their feet on implementing supervisory orders. The proposals also strengthen resolution and stabilization planning requirements for systemically important banks, and simplify how banks can pledge collateral to the Swiss National Bank to access emergency liquidity.

The Swiss National Bank put out its own statement the same day welcoming the package, calling it "crucial for resolving regulatory weaknesses highlighted by the crisis at Credit Suisse" and "an important step towards further strengthening the stability of the Swiss financial system." The SNB specifically flagged the new Liquidity Ordinance, which requires banks to keep enough eligible collateral on hand to draw on central bank support, and which takes effect January 1, 2027, with an Extended Liquidity Facility becoming available that same year.

The consultation period runs until November 19, 2026. That's a real opportunity for banks, industry groups, and the public to push back on specifics before anything becomes binding law.

The capital fight is a separate, uglier battle

Bonus deferrals are the easier lift. The harder fight is over how much extra capital UBS has to hold, and that one is stalled.

A Swiss parliamentary committee failed to reach agreement on Tuesday, August 11, on a draft bill that would require UBS to hold roughly $20 billion in additional Common Equity Tier 1 capital, according to Reuters, as reported by The Standard (Hong Kong). The committee will reconvene August 31, with lawmakers still targeting an upper-house vote in September, said Fabio Regazzi, a Centre party member of the committee.

The core dispute: the government wants UBS to fully capitalize its foreign subsidiaries with CET1 capital, up from the current 60%. UBS argues that's excessive and would hurt its competitiveness and Switzerland's standing as a financial center, an argument the bank has made publicly and consistently since the proposal emerged.

CET1 is the most expensive, least flexible form of capital a bank can hold. If Switzerland forces UBS to hold far more of it than international peers hold relative to their size, UBS could find itself at a disadvantage competing for capital and clients against banks in London, New York, or Singapore that face lighter requirements.

Some lawmakers are exploring a middle path: letting UBS satisfy part of the requirement with Additional Tier 1 (AT1) capital instead of pure CET1, according to fintechnews.ch. AT1 is cheaper for banks to hold and is designed to absorb losses in a crisis, but regulators view it as less reliable than CET1. Discussions have included adding a higher trigger point that would force UBS to suspend investor payouts if its capital ratio drops below a set threshold, a way to make AT1 tougher without going all the way to CET1.

Nothing on the capital side is settled. Details on how a higher AT1 trigger would actually work "have yet to be resolved," lawmakers said, according to Reuters.

Where this leaves things

The bonus deferral consultation and the capital fight are running on separate tracks, but they're both aimed at the same target: making sure Switzerland never again has to bail out a bank that's "too big to fail." Switzerland is one of the only major financial centers moving in this direction. The UK went the other way in October 2025, actually shortening bonus deferral periods for senior bankers.

The consultation closes November 19. The parliamentary committee reconvenes August 31, with an upper-house vote targeted for September. Whether UBS ends up holding an extra $20 billion in CET1, a smaller amount blended with AT1, or something negotiated down further, remains unresolved. UBS has made clear it intends to keep fighting the number down.