UBS’s Hamers Says Bonus Pool Won’t Match 24% Jump for 2020

(Bloomberg) --

UBS Group AG won't increase its bonus pool for 2021 at the same rate it did a year earlier, when it jumped by almost a quarter, as Switzerland's largest bank balances the need to retain talent with payouts to investors.

While variable compensation will be up, reflecting a good performance of the lender in a strong market, “it's not as much as” the 24% increase announced a year earlier, Chief Executive Officer Ralph Hamers said in an interview Tuesday with Bloomberg TV.

UBS is seeking to keep a lid on costs after announcing it would buy back up to $5 billion in shares this year and setting out new ambitions for its cost-to-income ratio. While Hamers acknowledged that the firm is seeing wage pressure in the U.S., in wealth management in Asia, and in investment banking across the globe, he said the challenge isn't so much bringing new people in as retaining talent.

“We're all in the same market here,” Hamers said. “Clearly, we pay competitively, we pay for performance,” but “there's more recipes than just pay to make sure that people stay.”

Across Wall Street, banks are contending with the need to attract talent as dealmaking booms, while ensuring top personnel aren't tempted to jump to other banks. Firms including Goldman Sachs Group Inc. and JPMorgan Chase & Co. are ratcheting up bonuses by as much as 40% to 50%, causing them to incur some of the highest expenses in years.

Deutsche Bank AG CEO Christian Sewing said last week that he was “very concerned” about the increasing war for talent. The lender, which is in the final year of a costly restructuring, is weighing an increase to its bonus pool of about 15%, Bloomberg has reported.

At UBS, costs in the key wealth unit rose in the fourth quarter, with operating expenses up 25% because of higher financial adviser variable compensation and a provision for a tax case in France. Compensation for its U.S.-based financial advisors was up 21% in the fourth quarter from the previous year.