| LONDON, March 6
LONDON, March 6 Swiss bank UBS AG will
tell its employees on Wednesday what bonus, if any, they will be
receiving for 2012, a year in which staff endured a radical
restructuring and the conviction of a rogue trader that has left
UBS, one of the last major European banks to dish out
bonuses for the past year, sank to a net loss of 1.89 billion
Swiss francs ($2 billion)in the fourth quarter and has already
said it will cap the cash it pays to any individual at 1 million
francs from the previous year's 2 million.
Staff in UBS's investment bank waiting to be told by their
boss what they have earned expect to be particularly hard hit,
given the series of controversies that have affected the unit,
such as a $1.5 billion fine for rigging interbank lending rates.
UBS, which declined comment on this year's individual
payouts, has cut its overall bonus pool for 2012 by 7 percent to
2.5 billion francs and introduced a scheme under which bankers
can be paid in a form of deferred financial instruments which
are revoked if the bank's capital targets are not met.
This year's bonus pool will also take into account the fine
levied on UBS for its part in the Libor scandal, which resulted
in the punishment of a number of top banks.
"The overall 7 percent cut doesn't tell what's going on in
the investment bank," said a banker directly concerned by the
matter, speaking on condition of anonymity. "Here (in the
investment bank), the cut is likely to be 30 to 40 percent as a
result of Libor".
UBS investment bank boss Andrea Orcel hosted a "townhall"
meeting of his bankers on Feb. 4 at which he told his 16,000
staff that half of them would be paid no bonus for the year.
In fixed income, for instance, where the bank is winding
down operations, 65 percent of teams can expect nothing on top
of their base salary, a second banker who wished to remain
anonymous told Reuters.
Another banker said some calls to clients due this afternoon
had been cancelled, expecting morale to be so low that the
veneer of "business as usual" would be hard to maintain.
"It's like driving a car with no gas. Andrea (Orcel) had his
pay cheque (of awards to staff) withdrawn," said a fourth
banker, expecting up to 60 percent of investment bankers working
in the advisory team to have zero bonuses, known in the industry
The bonus issue may fuel simmering tensions as Orcel
attempts to build a profitable advisory arm on a tight budget,
and after the bank in October announced 10,000 job cuts, 2,000
of which were in investment banking.
Orcel has also made several hires from his former employer
Bank of America Merrill Lynch and has lured big names
like Piero Novelli, a prominent European dealmaker recently
lured back to UBS.
Some insiders speculated about whether there were any
guarantees given to such senior hires which could create
disparities within the firm. But others said pay would still
hinge on performance.
One banker said: "Andrea very clearly sets himself up on a
pay-per-performance basis ... If you're not performing you don't
get paid, and he's harshest on the people he expects the most
"If you miss deals, you know about it. He absolutely wants
to make sure there is no structure where there are big
guarantees, haves and have nots."
UBS is not the only bank that has had to reduce compensation
in the wake of the 2008 financial crisis.
Deutsche Bank for instance is capping bonus
payouts for 2012 at 300,000 euros ($390,800), not including
deferred pay, sources told Reuters on Friday.
There are other forces also bearing down on bank pay and
executive rewards generally.
Brussels agreed a cap on banker pay last week and countries
including the United States and Germany have introduced advisory
"say on pay" votes, while Swiss citizens have voted to impose
strict controls on executive pay.
Support for the Swiss move was driven partly by the big
bonuses blamed for fuelling the risky investments that nearly
felled UBS, as well as outrage over a proposed $78 million
payment to outgoing Novartis Chairman Daniel Vasella.
Last year, more than a third of UBS shareholders rejected
the bank's plans for executive pay, including a 4 million Swiss
franc signing-on fee for new Chairman Axel Weber.