Switzerland has instructed Credit Suisse to cancel or reduce all outstanding bonus payments for the top three levels of management and examine whether already those already paid out can be recovered, the Federal Council has said.

Under Swiss banking law, the Federal Council can impose bonus-related measures on a systemically important bank if it received state aid from federal funds, according to a statement.

It is highly unusual for a government to impose a halt to bonus payouts, but there has been public backlash against bonus payments at the bank whose rescue was backed by roughly 260 billion Swiss francs ($280 billion) of state funding and guarantees.

The decision will affect around 1,000 employees, who will be deprived of approximately 50-60 million Swiss francs with the measures, the council said.

Bonus payments up to the end of 2022 will be cancelled for the Executive Board, and then halved for management one level below the board and reduced by 25% for those two levels below.

Credit Suisse must also report to authorities on whether it is possible to recover paid-out bonuses, added the statement.

For 2023, all bonus payments accruing until completion ofthe takeover by UBS will be cancelled or reduced for the top three levels of management, said the statement.

Separately today, UBS executives sought to assure investors that Switzerland's largest bank can make its unexpected takeover of rival Credit Suisse work and pay off for its shareholders.

Chairman Colm Kelleher described the biggest bank rescue since the global financial crisis as a milestone for the industry and a major challenge for the bank.

But he also told UBS shareholders it meant "a new beginning and huge opportunities ahead for the combined bank and for the Swiss financial center as a whole."

Last month, Swiss authorities announced that UBS would buy Credit Suisse in a shotgun merger to stem further banking turmoil after the smaller lender had come to the brink of collapse.

After a run on deposits, the Swiss government had turned to UBS, which agreed to buy Credit Suisse for 3 billion Swiss francs ($3.3 billion).

The Alpine state also put up more than 200 billion francs of support and guarantees.

Kelleher told the bank's shareholder meeting in Basel UBS was confident in its ability to successfully manage Credit Suisse's integration and that the combined bank would remain well capitalised.

"We believe the transaction is financially attractive for UBS shareholders," he said.

The hastily arranged rescue, not only angered and unsettled both banks' shareholders, but also many in Switzerland.

A survey by political research firm gfs.bern found a majority of Swiss did not support the deal that would create a financial institution with assets double the size of the country's annual economic output.

As shareholders expressed their frustration about being kept in the dark, with one calling it "an insult," some also voiced concerns about potential job losses and the new giant bank's adverse impact on competition.

Vice Chairman Lukas Gaehwiler sought to quell such fears saying there were around 250 banks in the country and therefore enough competition.

He also said it was too early to speculate about jobs before the merger had completed, which he expected to happen within a few months.

On Sunday, Swiss daily Tages-Anzeiger cited an unnamed senior UBS manager as saying that the workforce of the combined group could shrink by 20-30%.

Gaehwiler also said that "all options are on the table" concerning Credit Suisse's domestic business, which would continue to operate under its old brand in Switzerland for the foreseeable future.

In contrast to its smaller rival, UBS had been on a steady course. It reported a net profit of $7.6 billion for 2022 and strong inflows in wealth management, the company's flagship division.

Looking at how to navigate the mammoth task of integrating Credit Suisse, the success of which Switzerland depends on, UBS has already taken the first steps.

Last week, the bank announced it had rehired Sergio Ermotti as chief executive to steer the massive takeover - a surprise move to take advantage of the Swiss banker's experience rebuilding the bank after the global financial crisis.

Addressing shareholders for the final time as chief executive, Ralph Hamers acknowledged the merger has led to new priorities for the bank, bringing a change at its helm.

"The acquisition of Credit Suisse will be a major challenge," Hamers said, while echoing the bank's chairman in highlighting new opportunities.

"It is expected to create a business with more than $5 trillion in total invested assets," he said.

Today marks Ermotti's first official day back in the job, but he was not expected to attend the annual general meeting.

Sergio Ermotti, the new CEO of UBS

The meeting comes a day after executives at Credit Suisse faced their own shareholders and Chairman Axel Lehmann apologised for leading the bank to the verge of bankruptcy.

Reuters also reported yesterday that the Bank of England had approved UBS' takeover of Credit Suisse in Britain, a key market for the Swiss lenders racing to close the rescue deal.

UBS also secured a temporary green light from European Union antitrust regulators to complete its acquisition of Credit Suisse, but will still have to request clearance under EU merger rules, the European Commission said.