Swiss government mulls new governance standards
SWITZERLAND - The government is planning a host of measures aimed at improving corporate governance at local pension funds in the aftermath of the Swissfirst affair.
Details are still sketchy, but according to the federal social security agency, chief among the measures will be a ban on "parallel running" - that is where pension fund managers trade the same shares as their pension funds.
The agency also said the measures included a proposal to create an independent, national regulator, although it added that supervision of the schemes would still primarily rest with the cantons and regions.
Last summer, it emerged that seven pension funds, including those for multinationals Siemens and Roche, simultaneously dumped shares in the bank Swissfirst in early September 2005 - just before Swissfirst's merger with another bank. In dumping their shares prior to the merger, the schemes sacrificed a theoretical market gain in the millions of Swiss francs.
The schemes insist that their sudden withdrawal from Swissfirst had nothing to do with the bank's merger. "If we had known about the merger ahead of time, we would have held on to our shares," said Publica, the CHF30bn (€18.7bn) pension fund for Swiss federal employees.
Regulators for the funds have also vindicated them following a prolonged investigation.
But in late November IPE reported that Marco Frei, investment head for Roche's pension fund, sold his personal shares in Swissfirst following the merger, earning CHF50,000 in the process. Again, the relevant regulator in Basel has cleared Roche of any wrongdoing and Frei remains head of investments at the scheme.
A month before the news surrounding Roche, a study showed that Swiss schemes felt that their corporate governance was not greatly flawed. The schemes also spoke out against tighter regulation by the federal government.
To improve regulation, the schemes suggested that "more efficient implementation" of current best practice rules was necessary. Their view concurs fully with that of ASIP, the schemes' national lobby.
Regarding the new proposals, the federal social security agency said: "The goal of the measures is to improve regulation of corporate pensions generally and set conduct rules for the governance of pension funds."
The timetable would be for social affairs minister, Pascal Couchepin to finalise a draft law by June. Once finalised, the law must be approved by parliament to take effect.