UBS is both back, and paying more than Credit Suisse (updated)

If you want to work for a Swiss investment bank, life has just got a little more complicated. Until recently the choice was clear: Credit Suisse. UBS was, after all, a basket case that was struggling to keep costs under control and to pay market rates.

As of today, however, UBS has got out of the basket, and Credit Suisse is looking a lot less compelling. Here's what UBS's first quarter results say about the choice between the two institutions.

1) UBS now pays more

In the first quarter of this year, compensation accruals per head at Credit Suisse's investment bank were CHF116k; at UBS they were CHF122k.

This follows a year- on- year 77% increase in compensation accruals per head at UBS, and a 25% year- on- year decrease at Credit Suisse.

2) UBS can now afford to pay more

Doubts have been cast over UBS's ability to afford its investment bank. However, after delivering its best profit in three years, the investment bank appears to be within the realms of affordability.

At 52.8% for the first quarter, UBS's 1Q compensation ratio in the investment bank was higher than at Credit Suisse (29%), and higher than at all other competitors. Thanks to cost cutting in other areas, however, the cost income ratio in the investment bank fell from 83% to 72% quarter- on- quarter.

3) UBS is increasing market share; Credit Suisse is losing it

In the first quarter of 2009, UBS fixed income unit was off the radar with -CHF1.9bn of revenues. In the most recent quarter, it had gained a market share of 5%.

Over the same period, Credit Suisse's share of fixed income, currency and commodities revenues went from 8% to 6%. In FICC, the two banks are therefore nearly neck and neck.

Year on year, UBS has also increased its share of investment banking revenues from 4.5% to 7% (Credit Suisse went from 7% to 10%).

4) Credit Suisse is hiring; UBS isn't necessarily is hiring too

While Credit Suisse is building headcount, UBS had claimed to be holding back.

Despite rumours of big hiring in fixed income in London, UBS had said it wasn't recruiting. Its investment bank still employs 1,666 fewer people than at the end of 1Q09, and although investment banking headcount grew by 707 over the past quarter, this was mostly due to relocating 'corporate centre' staff from other divisions into 'control related functions.'

[Update at 16.00 GMT - it turns out that UBS is hiring after all - and admitting it. CFO John Cryan told Bloomberg that the bank plans to hire hundreds of fixed income and equities salespeople, and some selected corporate financiers.]

Credit Suisse, however, has made no attempt to hide its hiring in rates, leveraged finance, and emerging markets.

5) UBS's private banking business is no longer leaking

Wealth management outflows at UBS fell from CHF33bn in the fourth quarter, to CHF8bn in the first quarter. UBS is hiring in wealth management: it plans to increase its number of client advisors from 4,138 now to 4,700 in the 'medium term.'

Credit Suisse is also hiring in private banking and wealth management, but it quietly lowered its hiring targets late last year.