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Categorized | Banks

UBS raises pay for key investment bankers

Posted on May 31, 2013

UBS has increased salaries for some of its investment banking staff in what analysts said was an attempt to retain key bankers.

The employees who received increases on average saw their fixed pay rise by roughly 9 per cent, according to people familiar with the situation.

    The pay rises did not affect the whole investment bank, but targeted teams where UBS was concerned that it lagged rivals.

    Despite the adjustments, the investment bank’s total pay costs are not expected to rise, as the bonuses paid out by the division are falling.

    Switzerland’s biggest bank by assets revealed in February that its overall bonus pool fell 7 per cent year on year to SFr2.5bn in 2012, with the investment bank’s share slashed by 20 per cent as part of the bank’s efforts to recoup the fine it paid for manipulating the Libor interest rate.

    The changes to UBS’s pay structure fit into a broader industry trend in which banks are increasing fixed salaries, even as they come under intense pressure from regulators in various jurisdictions to rein in bonuses in the wake of the financial crisis.

    At the end of February, the EU proposed capping bankers’ bonuses at twice their salary, while in Switzerland, a set of proposals that include banning golden hellos and golden goodbyes at all listed companies is currently being turned into law.

    The decision to raise salaries comes eight months after UBS unveiled a radical plan to cut up to 10,000 jobs at its investment bank, while withdrawing from capital intensive businesses in fixed income and focusing on its traditional strengths in equities and advisory services.

    The overhaul is being overseen by Andrea Orcel, who was appointed co-head of the division last summer, and took sole control on the departure of Carsten Kengeter in February.

    Christopher Wheeler, an analyst at Mediobanca, said that the salary rises went hand-in-glove with the reorganisation.

    “Andrea Orcel knows that he has to look after the good people in UBS’s advisory and equities businesses, as the fact that they are no longer a full-service investment bank means they could lose staff, and thus business, in other areas,” he said.

    “Lots of investment banks have shrunk by accident; not many have done it on purpose. UBS is trying to do so, and it is key that it doesn’t lose its best people in the process.”

    UBS declined to comment.