This could be the year that clawbacks become an issue

UBS probably isn't going to go for clawbacks. As Kweku prepares to reappear in court today, Sergio Ermotti let it be known yesterday that rather than clawback Adoboli's losses from last year's deferred bonuses, he'll

(probably) just pay less in bonuses this year. UBS reserves the right to clawback bonuses in the event that a business division makes a loss, but in the first three quarters its investment bank made a profit of CHF561m, including the positive effects of its own credit (when own credit is excluded, the investment bank made a loss of CHF1bn).

Bankers elsewhere may not be so lucky: 2011 could be the year that a portion of previous years' deferred bonuses disappear.

Clawback fear is gripping corporate and investment bankers at BNP Paribas. As we noted a few weeks' ago, the French bank's clawbacks are said to be particularly punitive, allegedly stating that deferred bonuses will be withdrawn in chunks of 33% if the bank as a whole makes a loss, if the corporate and investment bank makes a loss, or if

an individual's own business area either makes a loss or fails to meet an unspecified ROE target.

Deutsche's clawbacks are also comparatively nasty, but unlikely to be invoked. The bank states that 100% of the deferred stock bonuses for 2010 that vest in a particular year will be clawed back for regulated employees if: group net income before tax is negative, or if divisional income before tax is negative. However, barring a fourth quarter disaster, Deutsche's clawbacks won't be triggered this year: net income before tax at the corporate and securities division in the first nine months was €3.2bn.

The most punitive clawbacks this year are likely to be those linked to ROE, which has been below expectations at most banks. Morgan Stanley pays its senior executives "performance stock units" which only pay out if specific (and unspecified) ROE and 'shareholder return' targets are met. In the first nine months of this year, return on equity at Morgan Stanley fell to 11%, down from 23% in the same period of 2010.

On the whole, however, US banks' clawbacks appear less punitive than European banks': they are generally restricted to senior management and to situations of individual malfeasance. Goldman Sachs' annual report makes no mention of clawbacks and headhunters say it rescinds bonuses merely in situations of wrongdoing. This may be just as well: Goldman's return on equity in the first nine months was just 6%.

For employees at European banks, 2011 may not be the last they hear of clawbacks: the issue is likely to linger in 2012. As a final kick in the teeth for those who are made redundant, deferred stock awards from previous years' employment can even be removed even after termination: people who lose their jobs now need to hope their previous employers remain profitable through to 2013 and beyond.