The Bonus War at UBS

UBS headquarters in Zurich, Switzerland.
Steffen Schmidt
UBS headquarters in Zurich, Switzerland.

The delay in the awarding of bonuses at UBS has many in the New York offices of the Swiss banking giant considering whether it is time to move to a rival firm.

Yesterday CNBC's David Faber broke the news that UBS was delaying the announcement of bonuses because top managers were unhappy with the size of the bonus pool. They felt that the pool was too small to allow them to fairly compensate their teams. Some feared they could lose their best people if they awarded bonuses smaller than what other Wall Street firms were handing out.

This could be taken as good news by UBS bankers—their managers are sticking up for them, after all. But in conversations with several people at the firm, that's not the feeling I got. Instead, it has provoked feelings of fear and anger.

"Look. It feels like they want to screw us. And that we're going to get screwed," one UBS staffer told me.

In a year of near record bonuses at many firms, UBS has apparently gone the other way.

"Everyone else is trying to keep bonuses low enough that they don't piss off the regulators. UBS has it backward, trying to lowball our own people," another UBS staffer told me.

The feeling inside the bank is that the mandate for low bonus numbers has come straight from the Alps—from the Swiss bankers who control the global giant. It's viewed as a battle of the Americans against the Swiss.

"The US operation lacks leadership, dynamism. Without someone to stick up for us, we're going to get dragged down by the Alpines," a staffer said.

The bonus battle has re-ignited some bitter infighting. Back in October, the bank appointed Philip Lofts as chief executive of the Americas division; previously he'd been the chief risk officer for UBS globally. The former CEO of the Americas division, Robert Wolf, remains in the chairman position.

Some inside UBS thought the decision to put Lofts in the CEO position was a mistake. Now the latest bonus blow-up has brought up the questions of Lofts' competence once again.


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