The slowing business in wealth management will affect the bonus payments of UBS bankers – and may yet have repercussions that will last much longer.
It was the fourth quarter of 2018 that did it for UBS, Switzerland’s largest bank. With declining equity prices, rich clients pulled a total of $7.9 billion out of their deposits, with markets in the U.S. and Switzerland most affected.
Asia wasn’t spared as clients borrowed less. In the whole of 2018, UBS attracted 40 percent less in new money in the region, compared with 2017.
Asia and Europe
Bad news for relationship managers: growth is an important variable in the calculation of their bonuses. UBS bankers have been told that their bonus for 2018 may be as much as 20 percent lower, according to a report by «Bloomberg», which cited sources it didn’t identify.
The main businesses to be hit by lower bonus payments are Asia and Europe. In 2017, the bonus pool had increased by about 6 percent to 3.1 billion Swiss francs ($3.12 billion).
And Going Forward?
If the report about lower bonus payments turns out to be correct, it may have further repercussions for the bank. Of course, cuts are easy enough to explain given the weaker business, but such cuts tend to precede departures among staff.
And even more so as the bank has already indicated that the lower volumes also had an effect on how the bank will perform in the first quarter. And that in turn doesn’t bode well for the next bonus season.
