If you want a banking job at UBS, good luck. Not only is the Swiss bank in the process of cutting 10,000 jobs, but the bank’s annual report, out today, shows that a large proportion of its hires come from among the people working there already. Moreover, most of its external hires are drawn from candidates who apply to the bank directly – not from recruitment firms. Hiring a senior banker from another firm has become almost prohibitively expensive.
This is what you need to know:
1. UBS made 41% of its hires internally in 2012
Forget hiring bankers on the open market, the current emphasis is on filling spaces with existing staff. Last year, 41% of UBS’s vacancies were filled this way, up from 28% in 2011. UBS also culled its use of recruitment agencies – only 9% of positions were filled with the help of recruiters in 2012, down from 16% in 2011.
2. It’s become prohibitively expensive to hire investment bankers from other firms
UBS paid a $26m ‘Golden Hello’ to Andrea Orcel, the chief executive officer of the UBS investment bank who joined in March 2012 from Bank of America. This appears to be a buyout of the deferred stock Orcel had amassed at Bank of America.
Other key investment banking hires haven’t been quite as expensive as Orcel, but they have been expensive. UBS said that it spent CHF203m buying out the stock of 96 key hires last year, an average of CHF2.1m each – before salaries or bonuses have been paid.
3. UBS paid some guaranteed bonuses last year
RBS said last week that it paid no guaranteed bonuses at all to new hires in 2012. This was not the case at UBS. Last year, UBS paid CHF40m in guarantees to 68 people, an average of CHF600k per head. It paid ten guarantees to ‘key risk takers’, in other words an average of CHF2m per head.
4. People love working at UBS
You might think morale would be a little sketchy at an investment bank which is lopping off 10,000 staff. Not so, says UBS.
Last year, UBS filled 5,381 roles. It employs 62,628 people, suggesting a turnover rate of around 9%. Ninety-five percent of candidates who were offered jobs at UBS accepted them. And as the chart below (derived from a poll of UBS employees) shows, an unusually high proportion of financial services employees find UBS a satisfying place to work.
5. UBS paid a lot of people no bonuses at all last year
The deep satisfaction people derive from working at UBS doesn’t appear to have been dented by its tendency to pay zero bonuses. Last year, the Swiss bank said it paid 8,837 people no bonuses at all.
6. Even though UBS is hiring people internally, it’s become harder to move between divisions and regions within the bank
A total of 906 employees at UBS transferred between business divisions in 2012, down from 1,228 in 2011. In other words, it seems that fewer M&A bankers are moving into private bank.
It also appears to have become harder to move into growth regions like Asia. Some 366 UBS bankers moved to different regions last year, down from 472 in 2011.
7. UBS offers its employees a way to increase their pay by 30%
UBS runs an ‘employee share purchase plan’ under which people can buy shares at market price. For every three shares they buy, UBS will give them one more. The shares vest in three years, as long as people keep working at the bank.
8. UBS has made more people subject to regulatory pay restrictions
In 2011, UBS more than doubled its number of key risk takers to 450 people. This year, it’s increased them again – to 500 people. Key risk takers working for UBS offices in the European Union must adhere to the EU’s bonus stipulations and will be affected by the coming bonus cap.
9. UBS pretty much adheres to the bonus cap already
In 2012, UBS paid its average key risk taker CHF1.6m. This was divided 1:2.6 between fixed pay (salary) and variable pay (bonus). At the very most, the EU’s cap on the ratio of salaries to bonuses is likely to be 1:2.5. UBS is almost there already.
10. UBS has not increased salaries
As banks seek to offset the EU bonus cap, the expectation is that they will increase salaries still further. This hasn’t happened, yet. On the first of March 2013 UBS said it increased salaries by…1%.