UBS Group AG plans to raise the fixed salaries for some of its more senior employees by as much as 20% in a move that may help reduce poaching and allow the bank to lower its bonus pool.
A review at Switzerland’s largest bank found differences in base pay among employees in the same roles, and when compared with competitors, people familiar with the plans said.
As a result, UBS will increase fixed compensation for those it found were underpaid while reducing their variable pay, the people said.
The changes come as competition for top bankers heats up, with Julius Baer Group Ltd. and Credit Suisse Group AG poaching teams from UBS in recent months.
At the same time, retaining talent with the promise of large bonuses is getting harder as the Covid-19 pandemic puts a spotlight again on banks’ variable compensation.
“UBS regularly analyzes its total compensation structure,” a UBS spokesman said. “As a result, we will adjust selectively certain salary levels to remain competitive. However, we view any change in salary as total compensation neutral.”
At UBS, bonus pools for 2020 are expected to be allocated next month and awarded to staff in the first quarter. Up until now, line managers had used variable compensation to make up for the pay inequities, the people said. Going forward, bonuses will be used to reward employees for out-performance.
Investment banks have seen bumper revenue this year, in part thanks to stimulus measures from governments and central banks. Paying out large bonuses for that performance may be hard to explain at a time when workers elsewhere are losing their jobs.