Swiss banks are worried that new Swiss regulations on staff bonuses to limit excessive risk-taking go too far and could put the country's key financial industry at a disadvantage to international peers.
The FINMA regulator announced proposed rules to force banks to link bonuses to long-term performance in June.
Yesterday, FINMA published banks' responses to the plans and said it would finalise new rules in early November, which will come into force on January 1, 2010, although a year's transition period is planned. The Swiss Bankers Association said it supported the general direction of the proposals, but said they went too far in interfering in company policy and would cause big administrative costs, particularly for smaller banks.
"We expect in particular that international developments and the rules of foreign financial centres will be closely watched and that the Swiss rules will be adjusted if necessary," it said in its written response to FINMA.
"Premature Swiss rules endanger planning certainty and could cause legal conflicts in the international context."
Reforming pay schemes for bankers, blamed for fostering a high-risk corporate culture that led to heavy losses and taxpayer-funded bailouts, is a key topic at the Group of 20 summit in Pittsburgh.
A draft communique from the summit yesterday suggested linking pay to "long-term value creation, not excessive risk-taking" but did not mention direct monetary caps as proposed by French President Nicholas Sarkozy and some other European leaders.
The Swiss regulator wants boards of directors to take more responsibility for remuneration and banks will have to disclose the remuneration structure for all employees, rather than just for top management as under current legislation.
Credit Suisse said the proposals could create serious competitive disadvantages for Swiss banks and urged FINMA to coordinate with regulators in Britain, the European Union and the United States before they come into force.
"The proposal go too far in many areas and can therefore lead to competitive distortions," the bank said.
FINMA did not publish any comment from UBS, which is supposed to comply with the rules already this year after it was forced to accept a government bailout.
UBS said last year it was axing bonuses for top executives and linking future payouts to the bank's results. But it has faced criticism for recent big hikes in pay for investment bankers to retain key staff after the bonus cut.