UBS’ Asia investment-banking bonus pool falls 15%

BloombergFriday, February 17, 2017
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Hong Kong • UBS Group AG’s Asia-Pacific investment-banking bonus pool fell about 15% after profit at the division slumped in the region in 2016, according to a person with knowledge of the matter.

The decline compares to a strong previous year, when the pool rose 20%, the person said, asking not to be identified because the figures are confidential. Bonuses for high-performing junior bankers in 2016 were mostly flat or fell by a single-digit percentage, the person added.

UBS’ lower bonus allocation reflects a 66% drop in profit at its investment bank in the region last year, as its equity-underwriting business slowed. It contrasts with an increase in pay for Credit Suisse Group AG bankers, who helped that firm generate higher revenue from underwriting and mergers advice in Asia in 2016.

The previous year’s bonus pool was one of the highest on record at UBS, especially for China bankers, as the bank gained business in the booming market for overseas stock sales by mainland companies, people with knowledge of the matter said. That has since cooled, with Chinese stock sales abroad tumbling 46% last year to US$30 billion (RM133.5 billion), the lowest since 2012, data compiled by Bloomberg show.

Pretax profit at UBS’ investment bank in the Asia-Pacific region fell to 300 million Swiss francs (RM1.33 billion) in 2016 from 900 million francs a year earlier, while earnings from overall businesses declined 41%, its filings show. UBS slid to 16th among underwriters of China overseas stock offerings in 2016, from second a year earlier, and its ranking for Asia Pacific fell to fifth from third, according to data compiled by Bloomberg.

UBS differentiated the pay of bonuses across different sectors of the investment-banking business. Bankers involved in equity issuance suffered a bigger reduction, with some getting a 15% to 20% cut, the people said. Bankers who focussed on mergers advisory and debt capital markets fared better, the people added. UBS ranked third among advisors on mergers and acquisitions in the Asia-Pacific region for 2016, up from 12th in 2015, data compiled by Bloomberg show.

Mark Panday, a spokesman for UBS in Hong Kong, declined to comment.

Total compensation for high performers will generally be flat or increase slightly, while some under-performers won’t get a bonus, one of the people said. Junior bankers’ bonuses are less impacted than those of their more senior counterparts, according to the people.

UBS reshuffled teams last year, removing senior heads at its Asia corporate client solutions unit as part of a move to save costs and run its businesses more efficiently, people familiar with the matter said at the time. Globally, the Swiss bank has put salary increases on hold at its investment bank, including for employees who are promoted, as it waits to see how compensation at competitors develops, people with knowledge of the matter said this month. — Bloomberg

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