UBS to cut Asia investment banking bonus pool by 8%

HONG KONG: UBS Group AG reduced the 2018 bonus pool for its investment bankers in Asia by about 8% after a slump in equity offerings last quarter hurt fees, according to people familiar with the matter.

Managing directors were the hardest hit, the people said, asking not to be identified because the information is confidential. More executive directors will get no bonus for 2018 compared with the year before, one of the people said. A representative for UBS in Hong Kong declined to comment.

Stock sales plunged in the final three months of last year as the MSCI Asia-Pacific Index suffered its worst quarterly performance since 2015, adding to the woes of global investment banks already being squeezed by tighter competition for deals.

UBS chief executive officer Sergio Ermotti (pic) said in January that the firm’s total bonus pool for 2018 would be roughly unchanged from the previous year’s 3.1 billion francs (US$3.1bil), according to newspaper Sonntagszeitung.

The shrinking bonus pool for senior dealmakers in Asia is a reversal from the previous year, when bonuses rose 6% reflecting a rebound in deals and efforts to retain junior staff focusing on China.

Junior bankers may still get raises for 2018 as the industry vies for young talent in the region, the people said.

UBS’ variable compensation pool was also dragged down by lagging performance in South-East Asia, the people said. The bank’s ranking in arranging share sales in Asean markets fell to 11th last year from seventh the year before, data compiled by Bloomberg show.

The Swiss firm also told some wealth managers in Asia and Europe to expect a bonus cut of as much as 20% for 2018, people with knowledge of the matter said in January, after the business missed estimates in the fourth quarter.