UBS has had a great start to the year 2020 – and yet, under the impression of the coronavirus pandemic, the company plans to curtail bonus payments, if shareholders are forced to take a cut of their dividend.
Should UBS not suddenly unearth a negative surprise when managers put together first-quarter results in coming days, the bank will present a very nice set of numbers: net income for the first three months of 2020 amounted to about $1.5 billion, a third above the year-earlier figure, the bank said in a statement on Thursday.
With a «strong operating performance in all business divisions, even after accounting for credit loss expenses and own credit valuation adjustments», the bank will exceed the expectations of analysts (which date back to the time before the pandemic). It seems unlikely though that the boom will continue under the current circumstances.
Finma Applied Pressure
It seems that Switzerland’s largest bank succumbed to the pressure applied by the finance regulator Finma and the demand for solidarity of the management with shareholders. Should the bank not be able to pay the second installment of the dividend in the autumn of 2020 because of a weaker performance this year, the board and executive will also see their variable payment components affected.
In that case, the bank will not pay its top managers a cash bonus. The bank would instead convert the bonus into deferred equity and similar financial products.
Top Earners
UBS also said it might resort additional measures in respect to the pay of Chairman Axel Weber and CEO Sergio Ermotti. The latter is one of Switzerland’s best-paid managers. He earned a total of 12.5 million Swiss francs in 2019.
Credit Suisse, which also altered the way it will pay out the dividend to shareholders, didn’t make a statement in regard to pay. It has said in mid-March that it had a successful start to the year.
