UBS takes action to improve staff retention rates…


UBS expects to cut its salary and bonus budget by about $4bn, or a third, as Europe’s biggest casualty of the US credit crisis adjusts its finances in the light of a reduced headcount and shrinking income from many of its core businesses.

The bank, which has had to write down about $43bn since the outbreak of the credit crisis, attributed the decline largely to investment banking, one of its core divisions alongside private banking and asset management, where there has been a sharp fall in business in many areas.


More than 2,600 staff have left UBS’s investment bank in the past year, some 12 per cent of the total. In the second quarter alone, the division cut its headcount by almost 1,700, reducing the total to 19,475. The group has a year-end target of 19,000.

Figures for the first six months showed the bank made salary payments or set aside bonus reserves of SFr7.76bn ($7bn). That was far less than the SFr11.77bn in the same period last year, and was the lowest such figure since 2003.

The decrease only partly represented bonuses, which are normally paid early in the year after that in which reserves are set aside.

However, UBS’s accounts for 2007 showed that 49 per cent of pay took the form of bonuses or variable compensation.

Bonuses tend to be more focused on staff in investment banking and asset management, where, especially in the US, such variable compensation comprises a higher proportion of salary than for mainstream retail or private bankers.

“The bonus pool will be smaller next year”, admitted Andreas Kern, a UBS spokesman.

UBS this month announced plans to give its three divisions greater autonomy, including making compensation and bonuses much more dependent on the performance of individual units, rather than the entire group.

UBS’s private bankers, traditional mainstays of profitability, have long complained about being treated unfairly compared with their sometimes stratospherically paid investment banking and trading colleagues.

UBS is also working to revise its bonus system, one of seven key targets in a new management strategy unveiled this month.

The new bonus structure, already the subject of considerable speculation, should be announced in the fourth quarter.

The greater independence being granted to the bank’s three divisions suggests that changes will be aimed at improving flexibility and transparency. UBS is also expected to take action to improve staff retention rates in its consistently most profitable areas.

The reduction in UBS payments, initially reported by Sonntag, a Swiss Sunday newspaper, has come amid widespread job losses and compensation cuts at leading investment banks after the credit crunch.


Richard Reid is the founder of Pinnacle Proactive, Specialising in theEmployee Assistance ProgramStress ManagementStaff Retention & Absenteeism. Take a Proactive Approach to Growing Your Organisation & its People. For more info visit



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