UBS prompts Swiss commotion over bonuses
Conflict was sparked Monday by UBS's decision to pay CHF 2 million in bonuses.ZURICH - A political conflict developed in Switzerland on Monday over a decision by UBS to continue paying bonuses after big losses in the financial crisis, causing accusations that it is misusing a USD 60 billion state rescue package.
A spokesman for the Swiss financial markets surveillance authority Finma confirmed that the watchdog "gave its agreement last week" to the bonuses paid to all staff at the country's biggest bank.
But he told AFP that Finma forced a "massive and substantial reduction" in the level of payments for 2008.
Some Swiss media reported on Sunday that the payments totalled CHF 2 billion (EUR 1.3 billion, USD 1.7 billion) instead of the initial CHF 3 billion.
The Finma spokesman declined to give the exact amount, saying that it would be revealed by the bank when its annual results were released on 10 February.
In 2007, UBS paid out some CHF 12.1 billion in bonuses. A spokesman for the bank said Friday that cuts in the bonuses would affect senior executives more than lower-level staff.
UBS was one of the banks most affected by the United States subprime home-loan crisis.
The bank, which was highly respected in Switzerland, sought a USD 60 billion state aid package in 2008 and lost dozens of billions of Swiss francs in deposits as customers withdrew assets.
Additionally, it is expected to report the biggest loss in the country's corporate history, about CHF 20 billion, for 2008, the newspaper Sonntagszeitung reported recently.
The agreement between Finma and UBS prompted an uproar among leftist parties.
"The bankers' arrogance knows no limits", the Socialist Party said in a statement, describing the decision as "incomprehensible" and calling for the resignation of the financial markets watchdog, Eugen Haltiner.
The Green Party said the bonus payments were in "bad taste".
The biggest party, the hard right Swiss People's Party said it had "taken note" of the decision, while the business-friendly centre-right Radical Party said it was not politicans’ responsibility to determine company bonuses.
In November 2008, UBS posted a net profit of CHF 296 million for the third quarter following a year of losses, but warned that a renewed loss would continue the following quarter.
Some former executives and the members of the current board gave up more than CHF 33 million in bonus payments late 2008.
But that only came after substantial political pressure, and the bank is struggling to restore its image.
While consumer associations were calling for changes to Finma, Swiss television SFTV said it received a hundred comments from outraged viewers on its online forum, calling the decision "scandalous", or even "perverse".
"Unfortunately, UBS just doesn't get it, so I'm going to assume my own responsibilities and cancel my account at UBS, something many did before me", one comment read.
The facade of UBS's headquarters was attacked with coloured paint bombs overnight earlier in January.
As a result of the credit squeeze, UBS cut its investment banking division after cutting about 9,000 posts worldwide since June 2007, with most of the job losses hitting outside Switzerland.
[AP / Andre Lehmann / Expatica]