The major Swiss bank thinks of it as a modest sum, which nevertheless amounts to hundreds of millions of dollars. UBS is also tying its senior management into the integration project with long-term bonuses.
Following the takeover of Credit Suisse (CS), UBS paid a high price to retain the crisis-stricken bank’s clients, as can now be seen in the annual report for that fateful year in 2023. In total, the bank paid selected employees retention awards of $736 million for retaining and acquiring clients.
Top producers and employees in key positions benefited from the awards, it was announced on Thursday when the annual report was published. However, the awards are fully deferred and the final value is only determined once the client assets are in the bank’s books.
Necessary Step
«As in most merger situations, these retention awards were a necessary step to support the protection of the client franchise, risk management and operational stability,» says UBS to justify the cost.
At only 3 percent of staff costs and relative to the size of the CS integration, the payments are «modest», it continued. The forced takeover of CS triggered a general sounding of the horn among the competition, which tried to make intensive use of the resulting sweeping change. Defending against these efforts is therefore crucial.
Same Rules of Play as With Management
UBS also wants to take account of long-term performance in compensating managing directors.
The bank announced that the long-term incentive plans (LTIP) that have been in place for some time for executive management (GEB) will also be applied to high-ranking managing directors on the levels below (GEB-1 and GEB-2) for the integration period.
Linked to Performance, Not Just Time
Payment of this long-term share-based payment is also linked to the company’s performance. This is in contrast to the previous allocation of UBS share options (equity ownership plan, EOP) for these managers, which are only paid out for a limited period of time.
«This will align the long-term focus of a broader group of senior leaders with shareholders during this period while supporting appropriate risk taking and awareness.,» UBS hopes.
The integration of CS should be completed in 2026, and by 2028 the bank aims to manage 5 trillion dollars in client assets in its Global Wealth Management (GWM).
