Switzerland’s Supreme Court has upheld a government decision to withhold bonuses from former Credit Suisse bankers following the bank's rescue by UBS, reversing an earlier ruling that deemed the move unlawful. The ruling, issued on September 16 and released publicly this week, concludes a legal dispute between the Swiss government and Credit Suisse employees over bonus payments tied to the 2023 bailout.

The court ruled that because the rescue involved extensive taxpayer support, paying out large variable bonuses was inappropriate. The government had intervened in 2023 amid financial turmoil at Credit Suisse, facilitating UBS’s acquisition of the troubled bank through a state-backed rescue package. This package included a loss protection agreement worth 9 billion Swiss francs (approximately $10 billion) and a public liquidity guarantee of up to 100 billion Swiss francs. UBS eventually ended these state aid arrangements.

Following the takeover, the Swiss finance ministry decided to cut bonuses for around 1,000 senior Credit Suisse bankers. Executives lost all outstanding variable pay, managers one level below the board had their bonuses halved, and those two levels below faced a 25% reduction. This approach aimed to prevent "unreasonably high variable compensation" given the scale of public funds involved, the Supreme Court noted.

In May 2025, the Swiss Federal Administrative Court had ruled in favor of a group of Credit Suisse managers, finding no legal justification to cut the bonuses since they constituted binding employment entitlements protected under Switzerland’s constitutional guarantee of ownership. That decision, seen as a “pilot judgment,” applied to a test group of 12 former employees but suggested similar claims could extend to as many as 1,000 bankers.

The Supreme Court’s judgment overturns that earlier ruling, siding with the government’s position. It rejected the argument that UBS’s repayment of the state support nullified the need to reduce bonuses. The court reasoned that despite eventual repayment, the bankers would still indirectly benefit from the taxpayers' intervention, albeit with a delay.

The final verdict is not subject to further appeal, marking a decisive legal victory for Swiss authorities and concluding a high-profile dispute over executive compensation tied to one of the country’s largest banking crises. The ruling underscores ongoing tensions about the role of public funds in stabilizing the financial sector and the limits on executive pay in such circumstances.