Things are still bad at UBS, but they are less bad than they seemed yesterday.
The Financial Times notes that the Swiss bank is making some special payments to discourage special people from leaving.
Mentioned on slide 24 of its analyst presentation, these payments will be comprised of stock awards currently totaling CFH300m (£207m) and – says the FT, will be dispersed among 850 people or 5% of UBS’s investment bankers.
The lucky recipients will therefore get £243k each over a three year period, depending upon the price of UBS’s stock.
The move is clearly intended to prevent a mass exodus of senior UBS bankers after it reduced the investment banking bonus pool by 60%. In 2008, UBS cut its bonus pool by 80% and many, many people left.
A UBS spokesman told us the special awards are in addition to the CHF971m investment banking bonus pool we mentioned yesterday. UBS CFO Tom Naratil said the special shares will be subject to, “even stricter forfeiture conditions upon departure than existing equity plans,” implying that anyone attempting to resign will have the £243k seized back. The plan could work, as long as UBS’s share price holds up.
While senior UBS bankers are having to hang on for their retention bonuses and senior bankers at other international houses are getting big deferrals, the same does not appear to apply at some of Russia’s better known banks.
"If you join a Russian bank in London, it's been quite usual to get all your bonus in at once," says Taru Oksman-Ison at search firm Riverhouse Partners. "Deferrals and paying in stock have been unusual."
The exception among Russian banks has, until now, been RenCap, which has apparently had international-style multi-year deferrals. Now, however, it seems VTB Capital is imposing something similar just before announcing its bonuses this Thursday. Needless to say, this could prove quite disappointing to anyone who was expecting to paid entirely in cash.
The Wall Street Journal reports that VTB is introducing share based awards which will vest equally over three years. Anyone who leaves or, “does various things that lead to a deterioration of the firm's performance,” will forfeit their stock.
Oksman Ison says Russian banks’ cash bonuses have been a big selling point in the past, which means VTB’s move could dent its attractiveness at a time when it’s trying to hire inLondon. If you want all your bonus paid at once, a better bet may be Otkritie, which – as we noted last year – seems to be fast and loose with big cash sign-ons.