Like Singapore, Switzerland used to be one of the neutral places when it came to banking pay. While the European Union was busy capping bonuses at no more than 2.5 times salaries and the UK government was busy approving of suggestions that banking bonuses should be deferred for 10 years, Switzerland was traditionally seen as ambivalent. Not any more.
Switzerland isn't becoming as harsh on banking pay as the Netherlands, which wants to cap bonuses at just 20% of salaries, but it is becoming a lot harsher than it used to be. And unlike the EU, it's starting to look like Switzerland's proposed pay regulations could lead to a hard upper limit on overall banking pay.
The source of Swiss bankers' pay problems began with the so-called 'Minder Initiative' - a proposal that first surfaced in 2008 and was championed by Thomas Minder, a Swiss businessman and head of a herbal toothpaste company. Voted through earlier this year, the initiative gives shareholders a mandatory say on executive pay.
The Minder Initiative is now being compounded with so-called '1:12 Initiative for Fair Pay', proposed by Switzerland's young socialists. In November, the Swiss will hold a referendum to determine whether this should be enshrined in law. Polls suggest 40% are in favour, 40% are against and 10% don't mind. It will be a close call.
If the law goes ahead, banks in Switzerland face big problems. Research by Unia, a Swiss trade union, indicates that banks are some of the worst culprits when it comes to compensation inequality. At Credit Suisse, for example, the ratio of the highest pay to the lowest pay is 209:1, at UBS it's 170:1, and at Julius Baer it's 130:1. Recent ratios are moderate compared to the past - in 2009 CEO Brady Dougan earned 1,812 times more than the lowest paid person at Credit Suisse.
The legislation won't only impact chief executives and board members. 'Key risk takers' and anyone earning more than CFH1m will also be affected. The good news is that the legislation won't cover Swiss bankers in London, only Swiss bankers in Switzerland.
Predictably, banks are a bit put out. In July, UBS chief economist Daniel Kalt issued a note complaining that the Minder Initiative could damage Swiss competitiveness. Research by Unia suggests the lowest salary at Swiss banks is typically in the region of CHF40k-CHF50k, making it possible that Swiss banking salaries will be capped at CHF600k sometime soon.
In response to the proposed legislation, Swiss financial services firms are doing what London hedge funds have been doing for sometime: threatening to leave for somewhere where regulation is less onerous. In May, Ivan Glasenberg, CEO of Glencore suggested the company might relocate to a more friendly place. Singapore looks like a possibility.
Olivier Godechot, a sociologist specialising in financial markets, said Glasenberg is making empty threats, however: "They're not going to displace hundreds of people for the sake of the few people who will be affected by this."
Godechot said Swiss banks and financial services firms are likely to find an alternative route around the problem. "Big banks can simply set up smaller subsidiaries based upon their different categories of employees," he proposed.