UBS bonus pool rises 10% as Archegos mars dealmaking boom

[LONDON] UBS Group raised its bonus pool for last year by a comparatively modest 10 per cent as the Swiss bank balances the need to retain talent after a bumper year for dealmaking with losses from the collapse of Archegos Capital Management.

Chief executive officer (CEO) Ralph Hamers received 11 million Swiss francs (S$16.3 million) for his first full year on the job, including 8.5 million francs in variable compensation. Former UBS CEO Sergio Ermotti earned 13.3 million francs in 2020, his last year running the bank. The bank set aside US$3.7 billion for employee bonuses for 2021, compared with US$3.3 million the prior year.

Banks across Europe and Wall Street have been ramping up staff compensation as competition for talent increases booming markets for trading and acquisitions. Dealmakers at Morgan Stanley, JPMorgan Chase & Co, and Goldman Sachs Group received bonus increases of as much as 30 per cent, 40 per cent and 50 per cent. Hamers has said that wage pressure in the US and Asia is more of challenge for retaining people than for hiring.

UBS's bonus allocation reflects the impact from prime brokerage client Archegos Capital Management's collapse last year. Traders experienced a decline of about 10 per cent in their bonuses on average after the UBS took an US$861 million hit related to the unwinding of Archegos positions, people familiar earlier told Bloomberg.

Revenue at the global markets business dropped 12 per cent last year, dragged down by the Archegos loss and a 35 per cent drop in its smaller fixed-income business. Bloomberg reported last week that the bank plans to house the global markets division and prime brokerage businesses in a newly-formed unit that will also include the business catering to the richest wealth bracket, as well as lending, and private markets activities.

Axel Weber received 5.2 million francs for his last full year as chairman from April 2021 to April 2022. Colm Kelleher has been nominated to take over as chairman of the board from April.

The bank's 2021 bonus pool for its executive management team is 79.8 million francs, a decrease of 6 per cent from the prior year. Hamers has changed metrics for the most senior employees so that a larger part of their compensation comes from overall group performance rather than the individual divisions they run. BLOOMBERG