It looks like the Swiss are finally waking up...

Regards - VHF

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This UBS building in Zurich had to have a clean-up earlier this month

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UBS Bonuses Make Many Shake Their Heads

SwissInfo

January 27, 2009 - 2:26 PM

There has been a public backlash over a decision by Switzerland's largest bank, UBS, to pay out SFr2 billion ($1.77 billion) in bonuses after massive losses in 2008.

The head of Switzerland's financial regulator, Eugen Haltiner, is also under fire after defending the decision to approve the payments, made after a substantial injection of public money into the embattled bank.

The centre-left Social Democratic Party has called for Haltiner, the president of the newly-created Federal Financial Market Supervisory Authority (Finma), to step down.

"The bankers' arrogance knows no limits," the party said in a statement, describing the decision as "incomprehensible".

Justice Minister Eveline Widmer-Schlumpf said she would raise the question of the bonuses at Wednesday's cabinet meeting. Speaking in a television interview, the minister said she would like to know according to what criteria the sums were allocated.

Switzerland's Green Party said the bonus payments were in "bad taste".

Rudolf Joder, a Bernese parliamentarian from the rightwing Swiss People's Party and a member of the House of Representatives' finance commission, said he had called on the government for complete transparency regarding the approval.

Johann Schneider-Ammann, a parliamentarian from the centre-right Radical Party also showed little understanding.

"You just can't explain this to the taxpayer who had to rescue UBS," he said, adding that Finma was sending the wrong signal to UBS staff, customers and the public.

Scathing comments

Most Swiss newspapers issued scathing comments on Tuesday although a few tried to understand the approval of the bonuses in what Haltiner described on Swiss television as a "hard" decision.

He argued that the payments, roughly equal to SFr26,000 for each of the bank's 77,000 employees, were responsible and that they were necessary to prevent workers from leaving.

The story had emerged over the weekend in the SonntagsZeitung newspaper, which reported that UBS had originally sought to pay out more than SFr3 billion.

In its commentary, Zurich's Tages-Anzeiger pulled no punches. "UBS is rescued by the state, makes a loss in the order of more or less SFr20 billion [in 2008] and despite that, hands out SFr2 billion in bonuses to its staff. Mr and Mrs Swiss will never understand that."

However, it made the point that the SFr2 billion was at least 80 per cent less than the SFr12 billion paid in the previous year, in which UBS also made a loss.

The paper also calls on people to consider that not all UBS employees are investment bankers who made errors of judgement.

Collective responsibility?

The Geneva newspaper Le Temps was less forgiving. "Why should the staff of a bank rescued by the state receive presents? Shouldn't they on the contrary collectively take responsibility for the monumental errors made by their management?"

In the Cash business daily, Zurich-based recruitment consultant Bjørn Johansson said he had little understanding.

"It is absolutely incomprehensible how UBS, which had to resort to state aid, could hand in such a bonus proposal," he said.

His view was shared by three-quarters of people who took part in a readers' online survey on the issue.

Swiss television also said it had received about 100 comments from disgruntled viewers on its online forum, calling the decision "scandalous" or even "perverse".

It is no secret that unhappy UBS clients have been withdrawing their money from the bank. And earlier this month in Zurich, a façade of the bank was vandalised with paint.

On Monday, UBS chairman Peter Kurer said that banks that did not transform their business model and abandon their current compensation structures would not survive.

At a conference in Riyadh, Saudi Arabia, he described the current environment as "a deep crisis and a long crisis".

He said that a "war for talent" had erupted in the banking sector but that banks still needed to change the compensation model, which he called excessive.