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  #521  
Old 17.10.2008, 15:00
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Re: Financial Crisis Bank News [was: How Safe is UBS?]

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Has anyone seen coverage of the fact that 10 Billion was paid in Bonuses by UBS in January 2008 but now they are cap in hand to the Govt for 6 Billion?
Yesterday's Blick mentioned 6 Billion in Bonuses.

Aren't those bonuses paid out as part of a contract, rather than board discretion? I'm puzzled by this stipulation in the US. How can the government step in on a contract between two parties? Don't they have to go to court?
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  #522  
Old 17.10.2008, 15:32
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Re: Financial Crisis Bank News [was: How Safe is UBS?]

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Has anyone seen coverage of the fact that 10 Billion was paid in Bonuses by UBS in January 2008 but now they are cap in hand to the Govt for 6 Billion? Do they not have to pay this "Boni" back or are the recipients too politically influential to be affected?
Not just UBS, but all the large banks still paid the usual bonuses last year. UBS has already said now that even this year they will again pay double-digit million bonuses to several of their top bankers.....

The only way out of this would be to regulate the max. compensation that banks are allowed to pay per employee - which won't happen.
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  #523  
Old 17.10.2008, 15:36
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Re: Financial Crisis Bank News [was: How Safe is UBS?]

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Aren't those bonuses paid out as part of a contract, rather than board discretion?
Yes, unless UBS are completely "out to lunch" then the bonuse payments were linked to success.
It is hard for ordinary mortals like me to understand how a bank that lost multi-billions could have interpreted this as "success" and paid huge bonuses.
Of course, it could be that the bonuses were not linked to financial success but to soft targets like answering the phone nicely & keeping employee performance reviews up to date.
Anyway well written bonus schemes/contracts have some small print that enables payment to be with held or re-calculated in extra-ordinary circumstances.

Ironically, it was said at the time that the bonuses were necessary to keep the rare & exotic UBS investment bankers; I have the impression that since many investment bankers were laid off - I suppose with large cheques to supplement their bonuses?

Marton
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  #524  
Old 17.10.2008, 16:28
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Re: Financial Crisis Bank News [was: How Safe is UBS?]

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i wouldn't expect anything less from a country whose national drink is called 'black death'!
Is that supposed to be funny?

We will have a hard time for some time, but we will get through it eventually and stay stronger than ever. Mistakes have been done, but we will never forget them and learn from them. Iceland is not dead at all
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  #525  
Old 17.10.2008, 16:30
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Re: Financial Crisis Bank News [was: How Safe is UBS?]

I can't speak for UBS but it's unusual for bonuses to be paid "as a matter of contract". Sometimes for new hires, bonuses are guaranteed but usually only for the first year. The usual practice in the financial services industry and certainly on Wall Street, is for base salaries to be fixed and bonuses to be "discretionary". That means going forward future bonuses can be slashed but clawing back bonuses that have been paid in past years would be impossible legally, however morally justified that may appear.
A lot of the senior mgt "golden parachute" severance packages includes stock and option awards which have been awarded in previous years but which are locked up and not delivered to the employee for a number of years. So the severance package isn't all "new compensation" but includes escrowed compensation from previous years. These are often forfeited on severance only if the employee goes to a competitor or if he's fired for misconduct (which doesn't include incompetence). Sad but true.
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  #526  
Old 17.10.2008, 16:30
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Re: Financial Crisis Bank News [was: How Safe is UBS?]

A bit dramatic headline...
Is Switzerland the next Iceland?
The press is getting a bit to much sometimes...
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  #527  
Old 17.10.2008, 16:32
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Re: Financial Crisis Bank News [was: How Safe is UBS?]

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Is that supposed to be funny?
Sorry, I also thought that was in poor taste.

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Iceland is not dead at all
I totally agree. I think with global warming, Iceland could be the next Hawaii.

Last edited by Phos; 17.10.2008 at 17:47.
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  #528  
Old 17.10.2008, 16:38
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Re: Financial Crisis Bank News [was: How Safe is UBS?]

The banks will make their redundancies before Christmas so that the bonus pool they get in Jan will be divided up between fewer people - though how "big" that pool is remains to be seen - it will be less but there will still be some people that get paid huge amounts to keep them - though I'd imagine a lot of that will be tied in to keep them there... Still give them an incentive to boost the share price back up
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  #529  
Old 17.10.2008, 17:07
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Re: Financial Crisis Bank News [was: How Safe is UBS?]

Just reading the various commentaries on the UBS rescue package a few interesting snippets. The Investment bank at UBS continues to lose money; net client outflows were massive - CHF 85 billion in q3 across all wealth and asset management businesses (compared to net inflow of CHF 14 bn at CS); the bank will have to take charges which will result in a loss for q4; the loan to fund the "bad bank" with toxic assets will be for 8 years, extendable to 12 years which gives some idea of how long it may take to work out of these positions if they can't be sold before maturity (also says a lot about problem facing banks who still have these bad assets) ; although the dumping of toxic waste should clean up the balance sheet in terms of future write down risk the amount UBS is going to have pay to the SNB in interest and loan repayments going to be a considerable drag on profitability.
So all-in-all, although the future looks more secure, big challenges ahead in terms of reversing outflows and uphill struggle to generate profits for forseeable future. Moreover CS is not saddled with all this baggage.
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  #530  
Old 17.10.2008, 17:14
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Re: Financial Crisis Bank News [was: How Safe is UBS?]

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net client outflows were massive - CHF 85 billion in q3 across all wealth and asset management businesses (compared to net inflow of CHF 14 bn at CS)
You heard it on this forum first
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  #531  
Old 17.10.2008, 17:24
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Re: Financial Crisis Bank News [was: How Safe is UBS?]

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You heard it on this forum first
Right! I see their Credit Default Spread is 130 vs 150 yesterday. Hardly a ringing endorsement.
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  #532  
Old 17.10.2008, 17:41
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Re: Financial Crisis Bank News [was: How Safe is UBS?]

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I had a conversation with a couple of old-timers earlier. These guys are old-old. They said they immediately bought UBS stocks upon hearing the SNB news...
... safe to assume then, that they are not long-term investors?
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  #533  
Old 17.10.2008, 17:46
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Re: Financial Crisis Bank News [was: How Safe is UBS?]

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... safe to assume then, that they are not long-term investors?
That's just it. These guys will not be around that much longer, yet there was something kinda heroic to their deed.... either that or they have way too much money in their hands.
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  #534  
Old 17.10.2008, 17:46
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Re: Financial Crisis Bank News [was: How Safe is UBS?]

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Has anyone seen coverage of the fact that 10 Billion was paid in Bonuses by UBS in January 2008 but now they are cap in hand to the Govt for 6 Billion? Do they not have to pay this "Boni" back or are the recipients too politically influential to be affected?
the recipients have no other influence than that there is no 'legal' basis for clawback of their bonuses... their employment 'contract' with the bank entitled them to a discretionary bonus, and the management, in its infinite wisdom, decided that whatever they did last year deserved 10 billion in bonuses... now if you can show that the CEO or directors were derelict in discharging their fiduciary responsibilities, or cooked the books, or misled investors - then there is legal grounds for getting that money back.
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  #535  
Old 17.10.2008, 17:50
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Re: Financial Crisis Bank News [was: How Safe is UBS?]

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the recipients have no other influence than that there is no 'legal' basis for clawback of their bonuses... their employment 'contract' with the bank entitled them to a discretionary bonus, and the management, in its infinite wisdom, decided that whatever they did last year deserved 10 billion in bonuses... now if you can show that the CEO or directors were derelict in discharging their fiduciary responsibilities, or cooked the books, or misled investors - then there is legal grounds for getting that money back.
Right, so all the political rhetoric about bonuses is just rhetoric. If attempted to carry out, some of it may even be illegal and subject to lawsuits.
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  #536  
Old 17.10.2008, 19:30
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Re: Financial Crisis Bank News [was: How Safe is UBS?]

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Right, so all the political rhetoric about bonuses is just rhetoric. If attempted to carry out, some of it may even be illegal and subject to lawsuits.
I think there is an awful lot of wishful thinking going on. The New York Attorney General is looking into the legality of the exit package paid to AIG's outgoing CEO so that might give some pointers. It may be easier to stop payments which haven't yet been made but as a general rule it won't be easy to find legal grounds to reclaim compensation already received.
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  #537  
Old 17.10.2008, 20:03
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Re: Financial Crisis Bank News [was: How Safe is UBS?]

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I think there is an awful lot of wishful thinking going on. The New York Attorney General is looking into the legality of the exit package paid to AIG's outgoing CEO so that might give some pointers. It may be easier to stop payments which haven't yet been made but as a general rule it won't be easy to find legal grounds to reclaim compensation already received.
Agreed, anyway it is spent - or lost in complex financial deals involving off-shore banks

Marton
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  #538  
Old 17.10.2008, 20:32
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Re: Financial Crisis Bank News [was: How Safe is UBS?]

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... now if you can show that the CEO or directors were derelict in discharging their fiduciary responsibilities, or cooked the books, or misled investors - then there is legal grounds for getting that money back.
Socialist Swiss parliamentarians are demanding just that! They want UBS to sue its former CEO/Chairman/Board as a precondition for Government bailout. But the parliament is business friendly and will approve bailout without prerequisites.
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Old 17.10.2008, 20:35
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Re: Financial Crisis Bank News [was: How Safe is UBS?]

The SPV (Special Purpose Vehicle) to restructure and sell the UBS "toxics" will be based in the Caymans for tax-free ops! Shameful.
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  #540  
Old 17.10.2008, 21:47
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Re: Financial Crisis Bank News [was: How Safe is UBS?]

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Socialist Swiss parliamentarians are demanding just that! They want UBS to sue its former CEO/Chairman/Board ....
Posturing for the media.

& if former CEO/Chairman/Board were to return their bonuses what would UBS do with it? More bonuses?

Marton
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