By Megan Murphy in London and Haig Simonian in Zurich
UBS is paying SFr300m ($329m) in long-term bonuses to its top bankers, as it fights to retain senior personnel after a $2.3bn trading scandal and a sweeping restructuring of its investment banking business.
The Swiss bank said the so-called ?special plan? awards, which were disclosed in annual results yesterday and are to be awarded this year, would have strict forfeiture conditions.
Only about 5 per cent of UBS?s 17,000 investment bankers are eligible and they will have to stay for three years before they can cash in the bonuses, according to people familiar with the plan. On average, each recipient will receive about SFr350,000 in deferred shares.
UBS wants to minimise departures from its senior ranks after slashing the investment banking division?s bonus pool 60 per cent in 2011, in recognition of weaker revenues and the $2.3bn in unauthorised losses allegedly racked up by a London-based trader.
?I don?t see how compensation should stay the same or go up if profitability of the banking industry is going south,? said Sergio Ermotti, chief executive.
He said that Carsten Kengeter, investment banking head, had waived his bonus for last year over the trading losses, which stunned the markets and forced the group to accelerate an overhaul of the division.
Across the group, UBS cut its bonus pool by 40 per cent, from SFr4.2bn to SFr2.6bn. In the investment bank, total pay fell from SFr6.7bn to SFr5.8bn but rose as a proportion of revenues to 63 per cent, from 56 per cent at the end of 2010.
Having conceded that it would no longer compete across the board with top-tier rivals, UBS is focusing on its core wealth management business.
? The Financial Times Limited 2012