UBS is announcing new MDs but some EDs feel unloved

A week after bonuses were announced, UBS is appointing new managing directors. The full list isn't yet out, but people like Graham Johnson, a US investment banker hired only last June from Barclays, have already let their good fortune be known. 

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While UBS's new managing directors celebrate, however, those a tier below them are feeling less content. Promotions invariably create disappointment among the overlooked, but at UBS some insiders say the disappointment is amplified. 

Part of the problem is bonuses. Some executive directors (EDs) at UBS tell us they were bad. "We have been very penalized," says one ED in the investment bank in London. "Bonuses for EDs are structurally awful."

UBS declined to comment, but multiple insiders say UBS hikes salaries significantly when people there go from vice president (VP) to ED. In investment banking, for example, the salary increase can be as dramatic as £170k ($212k) to £250k. While salaries rise, though, ED bonuses often fall - and some say the fall can be dramatic and enough to wipe out any advantage of the promotion. 

Matters seem to have been made worse by the acquisition of Credit Suisse. Although some managing directors say almost no Credit Suisse EDs were brought across in investment banking, others at UBS complain that the addition of Credit Suisse people made last year's ED bonuses particularly bad. Many were zeroed. If bonuses increased at all this year, it was off that low base. 

In markets, one quant says EDs also seem unhappy with bonuses. "Senior people have been punished more than juniors," he says. "I've seen a lot of people paid flat or even 10% down, which is made worse by inflation." 

Grumbling is compounded by the perception that competition for MD promotions has intensified after the Credit Suisse acquisition. Last year, UBS promoted a comparatively small MD class of 177 people, of whom fewer than five were investment bankers in London. One insider says the MD promotion process is "opaque" and that "the selection criteria are not well-defined, there's a lot of politics beneath the surface." 

The grumbling may be attributed to a pocket of complaintive or underperforming executive directors in one area of the investment bank. Across the bank, UBS calibrates compensation to reflect performance. One ED-level equities professional at UBS tells us that however badly off people think they are at UBS, it's much better than being at Credit Suisse. 

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