The Swiss private bank is reportedly ready to make its private bankers work harder for their bonus. The move is being sold as a method to keep staff, but also serves to clear out dead wood.
The Zurich-based private bank is tweaking its pay scheme in a bid to create a more equal pay structure across the firm, according to news agency «Bloomberg». The changes, mainly for new hires, mean that private banker bonuses are more closely tied to their performance, as opposed to some form of guaranteed payout.
The move seems to try to unify Julius Baer's two bonus schemes: one is a largely discretionary year-end judgement, and the other is tied to revenue and assets. It is the second which has helped fuel Julius Baer's faster growth than larger rival UBS in recent years – but the bank has also been snagged in several big scandals along the way.
Bonus Lure
The move would be significant because Julius Baer's private bankers are a hugely influential group. Ex-Swiss head Barend Fruithof, for example, quickly fell out of favor with the powerful faction when he sought to give Baer more oomph in the hotly-contested domestic market.
Julius Baer's top management under Chief Executive Bernhard Hodler are deliberating whether to roll out the performance-based changes, which it views as a way of motivating staff to stay put after recent exits, «Bloomberg» reported.
The outlet didn't specify which departures it is referring to; Hodler's predecessor, Boris Collardi, left for rival Pictet nearly one year ago, while Latin American head Gustavo Raitzin handed over to ex-Goldman Sachs banker Beatriz Sanchez last December.
Subtle Staff Pruning?
Four weeks ago, finews.com reported that ex-CEO Collardi was seeking to pick off private bankers in Latin America, but had yet to be successful in doing so. Julius Baer is vulnerable in the region amid a wider review by Sanchez following a money-laundering scandal which has roiled the bank.
The changes are likely as much economic necessity – is there such a thing as a guaranteed bonus in wealth management today? – as they are a subtle effort to prune staff without actually having to let people go. The timing is impeccable: just as private bankers sharpen their rhetorical arguments for bonus season. The bank said it hadn't made a final decision on bonus schemes yet.
