UBS bonuses were the highest for four years - for MDs
UBS’ annual report was released this morning. Contrary to expectations, it revealed that bonuses there were up substantially for senior staff.
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The bonus pool at UBS rose by 11% last year. However, the bonus pool for senior staff, defined as key risk takers (KRTs), rose by just 2% to $1.15bn. The individual KRT bonus rose by 27%, however, to $1.38m, as the number of KRTs fell from 1,038 to 835.
These KRTs, who are typically managing directors (MDs), were also paid salaries of $659k on average, resulting in an average of $2m in total compensation, the highest paid to UBS's senior people since 2021, when KRTs at the bank earned $2.2m each.
UBS defines KRTs as people that "have been determined to materially set, commit or control significant amounts of the firm’s resources and/or exert significant influence over its risk profile". It's a definition that's slightly more exclusive than the material risk taker (MRTs) designations at other banks; for example, European banks' MRTs typically include those earning over £660k ($856k). UBS' KRT equivalent compensation threshold is $2.5m.
It's not clear which business areas got the higher bonuses. Overall, UBS’s investment bank didn’t have the best 2024. M&A revenues were up 21% versus 2023; rival Deutsche Bank grew M&A revenue by 78%. In equity capital markets (ECM) and debt capital markets (DCM) revenues grew by 53% overall, also behind most rivals. In sales and trading, results were more on par with peers; equities and fixed income, currencies, and commodities grew by 23% and 10% respectively.
UBS isn't only paying bonuses to current staff, it's also paying severance bonuses as it lets people go. The bank intended to cut around 20,000 people following its ingestion of Credit Suisse. Last year, it spent $735m in severance pay, compared to the $485m it paid out last year. The number of severance beneficiaries (read: fired people) increased from 4,389 to 5,696.
The average severance payment therefore went from $111k in 2023 to $129k in 2024. The implication is that UBS was firing slightly more senior people than previously, or that it was firing in countries that have more generous severance pay requirements (eg. France). UBS cut only 5 KRTs over the course of 2024, despite indications that more senior Credit Suisse veterans would be targeted.
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