UBS has had its share of negative news lately with all the talk about massive layoffs in New York, Connecticut, London and Zurich. Still, there is something positive to talk about. Investment bankers who are still working for the Swiss bank at the end of the year will be getting their bonuses.
Senior UBS bankers say allegations that there will be nothing in the investment banking bonus pool this year are simply wrong. They also point out that UBS has not, as some reports have indicated, pulled out entirely from the Fixed Income, Currency and Commodities (FICC) markets as it restructures its investment banking business.
Under the new structure, UBS says it will still be able to provide debt underwriting deals for clients and have a limited trading capacity to support them, according to the Wall Street Journal.
UBS announced that it would split its investment bank into two divisions, Investor Client Services and Corporate Client Solutions. The investor group is made up of equities, foreign exchange and other trading businesses UBS plans to remain in such as precious metals and credit, according to a memo sent to UBS employees this morning and seen by the Wall Street Journal. The Corporate Client Solutions group will offer traditional investment-banking products such as M&A advisory and equity underwriting for companies and private-equity firms. A separate group within this division will be focused on risk management and will be known as Financing Solutions.
Investment banking bonuses at UBS
A seemingly spurious rumor that UBS will pay no investment banking bonuses at all this year has been going the rounds among London headhunters.
The head of one search boutique informs us that he was told by a senior UBS insider that the bonus pool is going to be zero for 2012: “Andrea Orcel has made a lot of promises to a lot of people and Orcel himself was hired on a big promise,” the headhunter claims, requesting anonymity. “When you take those promises into consideration and you look at the massive restructuring charge, there’s not going to be a lot left. We’ve been told by senior staff that bonuses at UBS are going to be non-existent.”
UBS is declining to comment officially on its bonus pool. However, the zero claim is categorically denied by a senior figure at UBS’s investment bank. Speaking off the record he says: “It is a total piece of crap that we have a zero bonus pool in the investment bank. We clearly stated its size in our results.”
This does, indeed, appear to be the case. The chart below, taken from the presentation accompanying UBS’s third quarter results, explicitly states that across the bank UBS has accrued CHF1.5 billion for new bonuses this year, and that this is separate from money set aside to pay previous years’ deferrals.
This is down on 2011 – but only by 20%. The chart also explicitly states that the figures given below don’t include restructuring charges. The good news: bankers at UBS will, apparently, get paid their bonuses this year.