UBS cuts bonuses by 10% after dealmaking slump
UBS Group cut employee bonuses for 2022 by 10 per cent after its revenue declined on a slump in mergers and capital raising. But its chief executive received a boost as his bonus jumped 11 per cent year on year.
In its annual report on Monday (Feb 6), the Zurich-based lender said it set aside US$3.3 billion for employee bonuses last year, down from about US$3.7 billion in 2021. Chief executive Ralph Hamers received 12.2 million Swiss francs (S$17.6 million) for his second full year on the job. This was an increase from the 11 million francs he received the year before.
The pay awards capped an uneven year for Switzerland’s largest bank. Its gains in trading and inflows in wealth management were offset by a roughly 50 per cent drop in the business of advising on mergers and capital raising.
Hamers previously warned that bonuses could be cut if dealmaking did not come back. He said in January that UBS had a “healthy culture of pay for performance”, although he did not believe there was a need for a bidding war. This was in part because several of its Wall Street rivals have begun to cut jobs in preparation for an economic slowdown. Just a year earlier, they were competing for talent.
Cross-town rival Credit Suisse is mired in a complicated restructuring that includes thousands of job cuts and a spinoff of the investment bank. The firm slashed the bonus pool for 2022 by about half, and said its management board took nothing after its worst year since the global financial crisis.
Some rivals, however, are still handing out large increases. Bloomberg reported that Italy’s UniCredit was set to boost the pool for last year by 20 per cent; this would likely be one of the most generous awards among European banks. Chief executive Andrea Orcel, a former UBS investment banker, was given a 30 per cent compensation increase after he received 7.5 million euros (S$10.7 million) for 2022.
UBS stood out among global peers in its confidence that it could avoid the large-scale job cuts across Wall Street. Cost pressures playing out in the industry were particularly acute for investment bank units.
Hamers faced a major setback last September, when the bank announced that it was pulling out of a deal to buy US robo-advisor Wealthfront. The purchase that was meant to widen its reach to the lower rungs of the wealthy in America. Instead of proceeding with the deal, UBS retrenched staff, saying it would focus on its traditional high-net-worth customer base.
New chairman Colm Kelleher earned 4.8 million francs after taking over at last year’s annual general meeting. Axel Weber, who stepped down from that role in April after a decade, earned 5.2 million francs, according to the report. BLOOMBERG
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