UBS cuts 2023 bonus pool by 14% after deal, trading slowdown

UBS Group cut its bonus pool for last year by 14 per cent after a tougher year for dealmakers and traders, as the Swiss bank increases its cost-saving targets amid the integration of Credit Suisse.

Chief executive officer Sergio Ermotti received 14.4 million Swiss francs (S$21.4 million) for his first nine months on the job, including 12.3 million Swiss francs in variable compensation, UBS said in its annual report on Thursday (Mar 28).

Annual profit came in at a record US$27.8 billion, driven almost exclusively by the extraordinary effects of the acquisition of Credit Suisse. The so-called negative goodwill effect, related to the low purchase price for the bank, was reduced by US$1.2 billion from an earlier estimate.

UBS brought back Ermotti as CEO in April last year to oversee the government-brokered rescue of Credit Suisse and the multi-year integration of the bank’s former rival. The bank posted a loss in the second half of last year and has warned that 2024 will be tougher as more complex integration tasks are carried out.

Chairman Colm Kelleher received fixed compensation of 4.7 million Swiss francs for the 2023-to-2024 period.

UBS’s bonus allocation reflects the impact from “challenging operating conditions for the financial industry, and the uncertainty and market volatility resulting from continued geopolitical tensions,” the bank said in its report.

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Banks across Europe are cutting the bonus pool at their investment banking divisions after a slump in deals and a slowdown in trading last year. BNP Paribas cut total variable compensation in its investment bank by about 5 per cent, while Deutsche Bank reduced its equivalent pool by more than 10 per cent.

Since closing the takeover of Credit Suisse in June, UBS has outlined major targets for the integration of its former rival including around US$13 billion in cost savings.

In a letter to shareholders, UBS said that Ermotti could remain at the helm of the Swiss bank even after the integration process with Credit Suisse is complete.

“Sergio has committed to stay at least until the completion of the integration process, if not longer,” the joint letter from the CEO and chairman said.

The pay packet makes Ermotti one of the best-paid executives among Swiss-listed firms, although he was behind Novartis’ Vas Narasimhan, who took home more than 16 million Swiss francs.

By comparison, HSBC chief executive Noel Quinn was paid US$10.6 million in 2023, according to the British bank.

In total, UBS executives got compensation of 140.3 million Swiss francs in 2023, a jump from 106.9 million francs in 2022.

Ermotti’s predecessor as CEO, Ralph Hamers, earned 12.6 million Swiss francs in 2022. The annual report did not disclose how much Hamers received as he left UBS last year.

Since the takeover, UBS’ market capitalisation has pushed past US$100 billion to the highest level in almost 16 years, helping to cement its leading role in global wealth management.

The bank will host its next annual general meeting on Apr 24, at which shareholders will vote on the nomination of Gail Kelly for election to the board of directors. She will replace Dieter Wemmer, who will step down after eight years on the body. All other members of the board of directors will stand for re-election.

The board will also propose an ordinary dividend of US$0.70 in cash per share for the 2023 financial year.

UBS also said findings drawn up by bodies in Switzerland looking into the 2023 collapse of Credit Suisse could result in “more stringent regulation” in future. BLOOMBERG, REUTERS