UBS bonus hike slammed for showing lessons not learned
By Katharina Bart and Steve Slater
ZURICH/LONDON (Reuters) - A jump in bonus payments at Swiss bank UBS AG UBSN.VX stoked criticism on Tuesday that a previous cut was short-lived and banks have not learned lessons from the financial crisis.
Banker bonuses drew intense criticism after the crisis which peaked in 2008 and 2009 for creating lucrative short-term incentives, tied to often ill-conceived products, whose failure cost banks and governments billions while leaving the bankers themselves unscathed.
Yet as conditions in the banking sector improve, UBS and other banks argue they need to keep rewarding top performing staff in areas such as merger and acquisition advisory, bond trading or advising rich clients, or risk losing them to rivals.
UBS said it had increased its bonus pool for 2013 by 28 percent to 3.2 billion Swiss francs ($3.5 billion), after a cut in 2012 when it was fined for rigging Libor interest rates.
It said it needed to reduce a pay gap between with other banks and said the increase was justified after a "transformational" year in which it swung to higher than expected net profit and surpassed most of its turnaround targets.
Critics said it showed little had changed after the financial crisis and argued banks were still paying staff too much, often at the expense of shareholders.
"It is offensive when bonuses outpace profits. It isn't really comprehensible," said Roby Tschopp, head of activist shareholder group Actares.
Actares voted against UBS's pay plan last year and Tschopp said he didn't know how he will vote this year. Continued...