Bonuses: UBS Wows, JP Morgan Lows
Time was when people working for European banks on The Street were paid a pittance compared to their bulge bracket counterparts. Not any more.
UBS bankers received their bonuses yesterday and should have reason to celebrate. Speaking at a conference on Wednesday, John Costas, deputy chief executive of UBS, said bonuses levels at UBS would be midway between those paid out by the likes of Goldman Sachs, Merrill Lynch, Morgan Stanley, Citigroup and JP Morgan.
Barclays Capital and BNP Paribas are also understood to have paid well. Conversely, word has it that JPMorgan and Citigroup have been distinctly parsimonious.
Gary Goldstein, CEO of search firm the Whitney Group, says this year's payouts suggest an equalization of bonus levels across different banks: 'There used to be significant gaps, with U.S. investment banks paying a significant premium over commercial banks. I don't see that any more.'
'Bonuses are evening out across U.S. and European banks,' says Deborah Rivera, President and CEO at the Succession Group. 'It's an ongoing process.'
UBS declined to elaborate on Costas' comments. But a managing director at the bank says bonuses were strong: 'Generosity doesn't come into it. We're making revenues on a par with the top Wall Street houses, and we're paying to reflect that.'
The Swiss bank is putting its money where its mouth is, says Gene Shen, vice chairman at the Options Group. 'They're in a dominant position across the board, and they've hired some exceptional talent.'
Hires include Ian Pereira last June, one of Morgan Stanley's most senior technology bankers, and Chris Hagstrom who joined from Société Générale last April to take charge of U.S. equity swaps to hedge funds. In 2004 UBS ranked ninth for U.S. M&A deals completed, according to Thomson Financial. The Swiss bank placed eighth in U.S. equity capital markets issuance and ninth in debt capital markets issuance according to Dealogic.
Costas said the bank's standing enabled it to hire without offering guaranteed bonuses. Last year, he said the bank offered 9% of employees guarantees. This year, that figure is 2%.
Last November, Clive Standish, CFO at UBS, said the bank was on course for one its best years ever in terms of profits. This contrasted to JP Morgan, which saw investment banking profits rise just 5% last year on the back of poor trading revenues.
Recruiters warn JP Morgan is ready to leak talent once its allegedly disappointing bonuses are banked. 'There are a lot of uncomfortable people there', says one recruiter. 'Dimon [JP Morgan president and COO] is sending a strong message that it's a cost cutting environment, and that if you don't like it he'll find someone else to fill your shoes. Headhunters will be all over the place.'
JP Morgan declined to comment.