It was only a matter of time before someone seriously did it. Claw-back provisions in bonuses at a bulge(esque)-bracket bank. You knew it was coming, but that makes it no less painful. No less painful at all. Even more dramatic, and prone to ignite a firestorm, is its retroactive application. Behold:
Just as bonuses (Latin for “good”) are paid out for good performance, maluses (“bad”) will be meted out if the bank subsequently makes losses or if the employee misses performance targets, UBS said. The maluses could wipe out all previously agreed share bonuses and two thirds of all cash bonuses under stringent new rules designed to align the interests of executives and traders with those of shareholders.
The Swiss bank announced plans for a complete overhaul of its pay system and disclosed that it was taking legal advice to see whether it could claw back previously paid bonuses from tarnished executives. That raises the prospect of UBS demanding and, if necessary, suing Marcel Ospel, its former executive chairman, for the return of millions of dollars of bonuses that he received before UBS collapsed into losses.
Before you get too worked up and start driving around with an Aimpoint topped M4gery carbine slung to your chest, playing Johnny Cash’s “The Man Comes Around” set on “repeat” and sleeping in a bathtub nights, just remember that if this doesn’t catch on, all the talent will drain away from Zurich and to some other, less radical bank. Here’s hoping….
UBS turns bonus culture on its head to claw back millions from failing executives [Times Online]
I’m glad Bella the dog died
@1 – thats fucked up. Bess should strike down upon you with great venegance and furious anger.
Question: What is bulge bracket bank mean? Sure, rag me on me but answer the fucking question.
@1 – thats fucked up. Bess should strike down upon you with great venegance and furious anger.
Question: What is bulge bracket bank mean? Sure, rag me on me but answer the fucking question.
how will this impact 1st year associate numbers?
I say ‘neigh’ to that policy as well, EP. Nay! Nay! Mayday! Jimmy Cayne is crashlanding for the last time, everybody run!
@1 You should be neutered! The execs should have the choice of signing checks or tossing salads.
@3 no consultants here, please.
@1 she couldn’t have taken this.
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Time to buy. Details below.
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90/100/110
Confirmed.
who wants to work at a place with your nose pressed against candy store window all the time, never to be let in?
@3 it means the bulge in the pants of financiers which can transform like megatron into a massive cannon used to give the wives of consultants the BSD thrashing of a lifetime
it’s funny that people think this is all justified. In all honesty it probably is. But the result is simple. Top performers will simply leave banking all together. Is that really what banks want?
methinks this reeks of desperation (obviously)
In common use, the term ‘bulge bracket’ refers loosely (in the US) to the group of investment banks considered to be the largest and most profitable in the world, as measured by various league table standings. Since the criteria for this judgment are unclear, there is often debate over which banks form part of the bulge bracket.
Ultimately it is a subjective term, sometimes based on Thomson Reuters League Tables or other deal and market share rankings. It is also a reference to the most prestigious institutions.
The term ‘bulge bracket’ also refers to the first group of investment banks listed on the “tombstone” (financial industry advertisement) notifying the public of a financial transaction or deal. In a public securities offering, within the underwriting syndicate, the bookrunning manager (the bank responsible for maintaining the order book when marketing the offering and therefore in control of allocation of securities to investors) appears above the others in the tombstone and on the cover of the prospectus. The font size of the name of this bank, or banks if there are co-bookrunning managers, is larger and it may “bulge” out.
They’re not “top performers” if they engineered the near bankruptcy of their own firm. That’s called fraud.
@13: Because if you don’t make 750k, it’s not worth working at all.
@3
Bulge Bracket:
Soviet Supremacy Capital Partners
Al Queda & Co.
Me Love You Long Time (China) Capital
Comoros Global Partners
EP – Am I missing a horse joke here, or did you mean to say “nigh?” Just askin’.
@13
Top performers will be abe to do one of the following:
1. Stay at UBS and perform in a manner that aligns their payoffs with those of the shareholders. i.e. no more levering up already levered crap and booking large day 1 gains.
2. Leave banking and go to “industry” where they will receive stock options that vest in 3-5 years – effectively doing the same as 1 above.
OR
3. Find a firm whose shareholders are ripe for another reaming, and blow them up (again).
3 is a bit harder these days, so 1 and 2 are the more likely outcomes.
@ 8 …not true anymore
Maybe talent SHOULD leave banking! Let’s get back to the good old days of conservative lending and boring old farts. Plenty of mediocre middle managers wouldn’t mind that steady 200k a year and a Christmas goose for a bonus
just heard that bonus figures for associates will be paid out in monthly rations of spam: 6 – 12 mos depending on level and performance
What about crab claw-backs?
Should Schwartzman be nervous?
The pirates got it right… steal 100 mil of cargo and sail the open sea. ARGH!
Don’t forget the rum
13, anybody can do banking. ANYBODY. you either dont work at one or you’re curled up in a corner in fetal position desperately trying to hold onto your job.
You are finished dumb fuck
@13 -
banking NEVER should have attracted “top performers” to begin with – that is ultimately what has caused all our problems – the “rocket-scientization” of finance.
If solid underwriting and the old 3-6-3 rule were never abandoned, the country’s best talent would be involved in useful endeavors, not figuring out ever more complex ways of slicing dimes into nickels.
@ 27
Useful endeavors such as, what? Law? Consulting? “Entrepreneurship” (ala dot com/tech bubble?
Everyone throws this line around, and I’ve considered where I would have been if not finance, and honestly, I don’t know. Unless you rise to CEO of a large firm or start your own firm and see it into becoming one, its very difficult outside finance to make alot of money.
Oh, wait, maybe that’s the point after all…
8, you can’t even spell or use proper grammer on your POS flak blog.
Enjoy buying HP earnings and stupid hedge funds trading oil companies up 5% while oil actually dropped – again.
TGFD agrees with #26 & #27…
Wall St bankers have no particular talent. Anybody could do those f’n jobs with some proper minimal training.
Scientists & engineers write the f’n programs and build the f’n computers. Qualified technicians maintain them. Wall St “rainmakers” (what a stupid, f’n annoying name) push the “enter” key. So what? No f’n wonder those “rainmakers” are about to go extinct. WhoTF needs them any more?
Let them all go “somewhere else”, whereverTF that is.
The Guy from Delaware
p.s.@#20…No more levering-up = No more rainmakers. What a loss of f’n talent. Talent?
Love the threats of “talent flight”…
There’s no talent among the 50k Citi dumped on the street? Get real..
Anal_yst – That is the point, you would have figured out something more “rewarding” to do, like gay porn. The rest of us would have been architects, except prgy, he would still be a janitor.
You mean ‘Nigh.’ And talent flight is not the worry to have at the moment – UBS is undoubtedly more concerned with the IRS. Where will they go? Piper Jaffray? The end isn’t near, and it isn’t the noise a horsey makes – it’s here.
Matt
TGFD,
“Rainmakers” are attorneys. Please don’t confuse the vulture with the carcass.
What a trainwreck….
EP, good job with Johnny cash reference. this truly is alpha and omega’a kingdom come.
actually, being a MOT i had no idea who alpha was, had to look it up. still a bit hazy on the kingdom come part
Does the claw-back only apply to the cash portion of the bonus or does it apply to the WWII gold filling legacy portion of the bonus?
- ex UBS banker
TGFD,
i don’t mond most of your banal comments but your last one really needs rethinking.
it’s easy to pile on- and there definitely needs to be some more piling. However, to suggest that banking and being a banker takes ‘no talent’ is simply plain fucking dumb. i was a banker, i was trader, and am now a trader again. banking was more rote, less so a meritocracy and more so a long slow climb on a white hot and well greased pole. but, most bankers- especially at the junior level (associate and below) were PLENTY talented. Pretty sad to see such genius squandered on Mammon and his minions- i agree, but they were and are plenty smart, waaaay smart. hell, even a few (very few) senior bankers were pretty talented. they are salesmen who have to have avery deep knowledge of their clients business and industry to bring the best financing/deal solution the firm has to said client. true most can’t but the few who can are truly talented.
so please tgfd- stfu!
RZA
@ 20 & 30
Yes.
As a country we spend far too much time discounting cash flows as opposed to pursuing them.
Especially when those cash flows are mortgage payments from people with no income, no job, no credit and no use for the house.
-The college kid
Special thanks to those Nov. UA $22.50 puts, you just paid for my college tuition.
@28 – the dot.com bubble was NOT caused by the entrepeneurs; it was caused by – quel surprise! – greedy Wall St. jerkoffs (Hi Grubman! Hi Blodget!) pumping stocks to the moon in public, while privately telling their best clients that the things were pieces of sh*t. The entrepeneurs behind Dell, RIM, Google and e-Bay have actually produced products that are quite useful; there are many others that fly under the radar, but also produce useful products and jobs. Of course there were failures, like the on-line pet store, but isn’t that how capitalism is supposed to work? Allocate risk capital to risky ventures and hope some of them work out?