February 07, 2012, 2:34 AM EST
By Elena Logutenkova
Feb. 7 (Bloomberg) — UBS AG, Switzerland’s biggest lender, cut its 2011 bonus pool by 40 percent as its investment bank posted the second consecutive quarterly loss.
The bonus pool, including pay that is being deferred into future years, amounts to 2.57 billion Swiss francs ($2.8 billion), down from 4.25 billion francs for 2010, the Zurich- based bank said today. About 707 million francs of the pool is earmarked to be deferred into future years.
The bonus pool at UBS’s investment bank is down 60 percent for 2011, Chief Financial Officer Tom Naratil told reporters on a conference call today.
The world’s biggest lenders are curbing pay as they grapple with shrinking revenue. Deutsche Bank AG, Germany’s biggest bank, said last week it shrank its bonus pool by 17 percent for 2011, while deferring a bigger portion of the awards into future years. Credit Suisse Group AG, the second-biggest Swiss bank, plans to pay part of bonuses to senior employees in bonds made from derivatives. Lazard Ltd., the largest independent merger adviser, said yesterday it cut discretionary bonuses for 2011 by about 20 percent.
UBS is shrinking its investment bank as stricter capital requirements and the European sovereign debt crisis hurt profitability. The company plans to shrink risk-weighted assets at the division by almost half under the Basel III rules, and reduce the number of employees to about 16,000 from 17,256 at the end of December.
The securities unit reported a fourth-quarter pretax loss of 256 million francs earlier today, after a loss of 650 million francs in the third quarter when it lost $2.3 billion because of unauthorized trading.
–Editors: Dylan Griffiths, Frank Connelly.
To contact the reporters on this story: Elena Logutenkova in Zurich at elogutenkova@bloomberg.net
To contact the editors responsible for this story: Frank Connelly at fconnelly@bloomberg.net
