Morning Coffee: Libor Fine May Dry Up UBS Bonus Pool
UBS is expected to be fined more than $1 billion for its role in the Libor rate-fixing scandal. The biggest losers may be UBS bankers, who will likely see their bonuses slashed.
The expected penalty will be more than double the $450 million fine Barclays agreed to pay in June, prompting questions whether it was UBS – and not Barclays – that played a central role in the rate-scandal that may involve as many as a dozen banks. For months, Barclays has been the assumed lynchpin behind the controversy.
For UBS bankers, the settlement couldn’t come at a worse time: bonus season. “It’s a lot of money and bonuses will probably be affected,” Dirk Becker at Kepler Capital Markets told eFC’s Sarah Butcher. The fine also makes it more likely that UBS will clawback a higher percentage of bonuses from the firm’s equity ownership plan.
How significant the bonus cuts may be is up for debate, but Chris Wheeler, an analyst at Mediobanca, told Butcher that the damage should be minimal.
“They are laying off staff and need to maintain morale – people are already leaking things to the press,” Wheeler says.
We’ll have to wait and see.
Securities-industry employment has grown 85% in St. Louis since 2007. It’s dropped 10% in New York over the same period.
Knight Layoffs? (eFinancialCareers)
A potential sale of Knight Capital Group would likely result in a workforce reduction, especially if the purchasing company is Chicago’s Getco.
Bruce Bent Sr. and his son Bruce Bent II, co-managers of the Reserve Primary Fund that “broke the buck” in 2008, were cleared of fraud charges in November. Now the SEC wants another shot at them in court.
Knowledge is Power (Bloomberg)
A proposal that would require financial advisors to disclose signing bonuses they received when moving to a new firm could have a huge impact on recruiting. “It’s like knowing the car dealer’s price list.”
Death of Fixed Income? (Financial News)
Only 40% of global corporate bond dealers are committed to running fixed income operations. Future exits will likely result in a "dramatic overhaul" of bond markets.
DB Headed into the Black (BBW)
Saddled with costs from restructuring, Deutsche Bank may post a net loss for the fourth quarter. And the bank has yet to agree to a settlement with regulators over Libor manipulation claims. Oh, and their headquarters just got raided by tax authorities.
Buzz Around the Office
A Florida woman came home last week to find her driveway had been stolen. That’s right, her driveway.
List of the Day: Making Lemonade
In the current economy, it’s not uncommon to take a job in a new industry, often for much less pay. Here’s how to make the best of it when you’re starting over.
- Remain humble.
- Find a common ground with younger employees.
- Ask for more responsibility.