UBS to raise investment bank bonus pool as much as 20%

[ZURICH] UBS Group is planning to increase the bonus pool for its investment bankers by as much as 20 per cent after a surge in trading revenue helped Switzerland's largest bank post the highest profit in five years.

Employees in the key wealth management unit will see variable compensation flat or slightly up from the prior year, with significant variations depending on the region, people with knowledge of the matter said, asking for anonymity because the figures aren't public. The bank paid out about US$2.7 billion overall in variable compensation in 2019.

A UBS spokesperson declined to comment. The bank is scheduled to publish its compensation report on March 5.

UBS has navigated the pandemic better than many of its peers as its loan book proved resilient and the investment bank benefited from a surge in trading, with pretax profit at the unit more than tripling from a year earlier.

Chief executive officer Ralph Hamers signalled that variable compensation would reflect that performance when he presented fourth-quarter earnings last week.

By contrast, local rival Credit Suisse Group is considering cutting its overall bonus pool by at least 10 per cent after a series of charges hit the Swiss bank's profit last year, Bloomberg reported previously.

At UBS, wealth bankers in the the Asia-Pacific regions are expected to receive some of the higher rewards for that business, with bonuses increasing by 10 per cent, the people said. In Europe, some private bank employees will see decreases of between 10 per cent and 15 per cent.

UBS previously revamped the pay structure for some of its more senior employees, raising fixed salaries by as much as 20 per cent to reduce poaching and allow the bank to lower its bonus pool in the years to come, Bloomberg has reported.

The change was prompted by a review that found some of its employees were not being paid equally for the same roles and when compared with competitors.

BLOOMBERG