Stop paying employees short-term bonuses

25 April 2008

BERN – The head of Switzerland’s central bank says the industry should stop paying employees bonuses that put short-term results ahead of long-term performance.

The chairman of the national bank’s governing board says the industry should correct what he calls the “excesses” in its pay.

SNB boss Jean-Pierre Roth said in a speech Friday that financial institutions must improve their oversight to avoid the costly mistakes that have hit the country’s major banks over the past year.

Switzerland’s two largest banks – UBS and Credit Suisse – have both reported massive losses due to bad investments linked to the U.S. subprime mortgage crisis. The losses have led to calls for tighter controls on Switzerland’s iconic banking sector.

[AP / Expatica]