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5. Farewell to the Old Bonus System

Compensation in banking is all about individual performance and meritocracy. The performance of staff is measured over the full year and compensated accordingly. Since technology and finance have been merged in the industry, the system of individual bonuses has become obsolete. Algorithms, machines and robots have replaced people in many areas of banking.

UBS 1 500

Today, staff are working in teams that reach across divisions. The focus on the full-year reporting period is no longer appropriate given the long-term adjustments that are required. Migros Bank and Raiffeisen have pioneered the abolishment of the old bonus system. Hamers would do well to follow suit at UBS.

6. Walk the Talk

Designing a new compensation system is one thing. Implementing it quite another. Hamers will have boosted his income very substantially by joining the Swiss No. 1. In 2018, Hamers had a fixed compensation of 1.75 million euros and he didn’t get a bonus because the bank had to pay a huge fine for a sub-standard anti-money-laundering effort.

In the same year, Ermotti got about 2 million francs in cash as well as 11.3 million francs in performance-related compensation. The Dutchman no doubt will be answering many questions about his new pay package in the coming months.

He will lose some of his credibility as a pay reformer should the total compensation package appear too generous. «Walk the talk» is going to be a credo to follow. Many UBS bankers seem upset about the riches awarded to the top management: the wage gap between top management and normal staff has widened in recent years, after several rounds of cost-cutting.

7. Digital Banking a Must-Have

At ING, Hamers earned top marks for being the engine behind all things digital, and that’s the main reason why Chairman Weber hired him. In Switzerland, there’s no need to teach bankers what private banking is about. It is therefore to be expected that Hamers will spend most of his time with  Keller-Busse and much less with Khan at wealth management.

The UBS bankers themselves speculate on which of the divisions he will tackle first. Being a retail banker, Hamers might want to dig in at the Swiss business with private and corporate clients, an area where the bank in the past has launched a great many digital projects, work that tended to remain fragmented.

But there are areas of interest in investment banking, for instance, the research being done on the use of Blockchain technology and in wealth management. Khan would like to get better machine support for his relationship advisers.