In the proceedings, Switzerland’s highest court had to determine whether Article 10a of the Banking Act (BankG) provided sufficient legal grounds for the complete or partial cancellation of unpaid compensation owed to the top three management levels of the defunct Credit Suisse (CS).

The Federal Administrative Court had still upheld the appeals of those affected in March 2025. The Federal Supreme Court has now overturned that decision, according to a statement on Thursday.

Cancellation or Deferral

At its core, the issue was whether bonus payments could be cancelled or merely deferred. The Federal Administrative Court had taken the view that the provision allowed only temporary measures in the form of a deferral of payment.

According to the Federal Supreme Court, the wording of the provision means that the Federal Council may order measures “for the duration of the support claimed,” which limits the period during which the Federal Council may order measures, but not the measures themselves.

The Banking Act provides a sufficient legal basis for this measure. The Federal Supreme Court therefore upholds the appeals of the Swiss Confederation and UBS against the Federal Administrative Court’s ruling.

Cancellation of Bonuses for the Top Three Management Levels

The CS banking group fell into a rapidly escalating crisis in mid-March 2023. On 19 March, the takeover of CS by UBS was announced. On 23 May 2023, the Federal Department of Finance (FDF) ordered that bonuses already accrued and not yet paid, as well as bonuses still accruing, for employees in the top three management levels of CS and the CS Group be cancelled in whole or in part across the group.

Contrary to the lower court’s view, Article 10a of the BankG provides sufficient legal grounds to cancel bonuses in whole or in part, the Federal Supreme Court further writes. In particular, the message on the 2012 revision of the BankG, which entered into force in 2012, makes it clear that the legislature considered the cancellation of variable compensation when granting state aid to a systemically important bank or its parent company as a possible measure.

Measure Was Proportionate

The conditions for applying Article 10a of the BankG are met in this specific case, the court also stresses. The fact that the liquidity assistance provided by the Swiss National Bank was later repaid and that the Confederation received a premium in return is not decisive.

In light of the Confederation’s default guarantee of CHF 100 billion, there was a strong public interest in the measure. In particular, variable compensation for previous financial periods during which the groundwork was laid for the need for state aid was not to be financed with public funds. The (partial) cancellation was graded according to management level and thus according to an objective criterion.

“It proves to be proportionate,” the Federal Supreme Court concluded.