UBS revealed the size of its 2019 bonus pool today and it's become apparent why there were a few complaints when bonuses were announced at the start of ths month: the bonus pool at the bank is at its lowest level since 2012.
The 'group performance award pool' at UBS was CHF2.7bn last year, down 14% from CHF3.1bn in 2018. This was the first time UBS cut its bonus pool since 2016. 'Performance awards' across the bank were at their lowest level since 2012, when the pool was CHF 2.5bn.
UBS's parsimony comes after a 37% decline in profits at the investment bank last year, with costs consuming 89% of revenues. The Swiss bank has found itself a new CEO who's all about digital transformation, but he won't be transforming anything until after the summer.
As UBS's bonus pool has fallen, so too has compensation for its shrinking pool of 'Key Risk Takers (KRTs)', comprising everyone there earning more than US$/CHF2.5m, group managing directors and key people in front-office roles, logistics and control functions. Last year, UBS had 661 of them, down from 675 in 2018 and 707 in 2017.
The average key risk taker at UBS earned CHF1.6m in 2019, down from CHF1.8m in the two previous years. Compensation was split between salary and bonus as per the chart below. It probably doesn't help that UBS also boasts of having the 'longest vesting periods in the industry.' - 'The average deferral period is 4.4 years for GEB [group executive board] members, 4 years for GMDs and 3.5 years for employees below GEB / GMD level,' says today's remuneration report.
Clearly not everyone at UBS can be a key risk taker. Away from the elite with the CHF1m bonuses, the average bonus paid at UBS last year was far lower, at CHF40k.
UBS also revealed today that Iqbal Khan, who joined as co-president Global Wealth Management on October 1 2019, received CHF8m in stock to buyout his Credit Suisse shares. Khan's award vests in installments between 2020 and 2024.
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