Top Firm Mulls New Staff Incentive Scheme
As The Wall Street Journal points out, it's hardly fair if, for example, the bank's asset management staff have a stellar year, only to find that losses over at the investment bank have hit profits and the firm's stock, and that deferred equity awards are in the toilet. Conversely, the investment bank could come good again, only to find that a US tax evasion-like scandal affecting the private bank weighs the bank's stock down. Three units, 'one bank', and only one stock price. Quite a problem. The answer, according to the newspaper, might be the introduction of a 'phantom equity' scheme for each unit, which will enable UBS to more closely tie reward with performance in the respective businesses. And that idea is apparently under consideration.
In the meantime, Financial News reports that UBS's UK wealth management unit has slashed its fees for high-net worth clients using its services next year by up to 50%. This is a defensive move to retain clients in the wake of concerns over defections to the likes of Vestra Wealth.
The Independent reports that UK market regulator The Financial Services Authority (FSA) has warned firms that they should ensure that downsizing initiatives don't unnecessarily result in chopping heads in control and risk. The newspaper quotes FSA CEO Hector Sants, who recently advised firm bosses: 'We recommend that you consider any headcount reduction exercises that will affect valuation and control functions at this sensitive time'.
The Daily Telegraph reports that Royal Bank of Canada has managed to hire over 100 senior bankers from rivals in the US like Citi, JPMorgan and UBS in the last few months, and is soon expected to announce a number of key hires in London.
All over Wall Street consulting firms are being commissioned by under-fire investment banks, who are looking to cut back on costs. Ironic that some 6% of non-compensation costs are down to commissioning consultants to strut their stuff!
Finally, Bloomberg reports that earnings estimates from Wall Street analysts came good for only 6.7% of Standard & Poor's 500 companies in the second quarter, the lowest figure since the news agency started to collate the data in 1992. Accuracy peaked at 30% in the final quarter of 2000.
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