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UBS CEO Sergio Ermotti's salary for 2023 is CHF 14.4 million, drawing significant criticism and calls for transparency and a cap on bonuses. The UBS Remuneration Committee, composed of international members with limited ties to Switzerland, is under scrutiny as it decides on executive compensation amidst growing public and political pressure for reform.
Karin Keller-Sutter has shifted the decision-making on UBS's capital requirements from the Federal Council to Parliament, delaying the process significantly. The SP has criticized this move, warning of risks to financial stability, while the SVP has retreated from its previous hardline stance on banking regulations. A referendum on the equity issue may follow, but any changes are unlikely before 2027 or 2028.
UBS Chairman Colm Kelleher is restructuring the Board of Directors, nominating Renata Jungo Brüngger, a Swiss national and Mercedes-Benz executive, and Lila Tretikov, an AI expert, both of whom lack banking experience. They will replace Claudia Böckstiegel and Nathalie Rachou, who are stepping down for personal reasons.
Sabbatical leave, once a rarity, is gaining traction in the corporate world, particularly in investment banks. Credit Suisse's generous policy contrasts with UBS employees who lack similar benefits post-merger, highlighting disparities in workplace perks. While only 6% of U.S. employers offered paid sabbaticals last year, the trend is more favorable in the U.K., where 53% of managers reported sabbatical availability.
UBS has undergone a significant transformation since the financial crisis, focusing on wealth management and reducing risk. In 2023, it made headlines by acquiring Credit Suisse, creating a financial powerhouse with over $5 trillion in assets, further solidifying its position as a leading global wealth manager. The strategic partnerships in Asia and South America highlight UBS's commitment to growth and innovation in the financial sector.
UBS executives Sergio Ermotti and Colm Kelleher are contemplating a move from Zurich to London or possibly Singapore, driven by regulatory pressures and capital demands from Swiss politicians. While the bank's departure could diminish Zurich's prestige, most jobs and key operations would remain in Switzerland, particularly in private banking and asset management. The focus for growth lies in the U.S. investment banking sector, which UBS seeks to expand without relying on Swiss taxpayer guarantees.
Nearly two years post-merger, UBS employees experience benefit disparities, particularly with former Credit Suisse staff in the U.K. retaining paid sabbaticals not available to UBS colleagues. While UBS acknowledges these discrepancies, it asserts that both benefit packages remain competitive. The integration process continues, with plans to standardize benefits over time.
Following the merger with UBS, former Credit Suisse employees in the UK can retain certain benefits, including the ability to take a sabbatical of up to three months every five years, a privilege not available to UBS staff. As UBS plans to reduce its workforce from 109,000 to 85,000 by 2026, the integration of Credit Suisse employees poses challenges due to differing corporate cultures and client risk profiles.
UBS is under pressure to raise at least 25 billion in equity to avoid future bailouts, but CEO Sergio Ermotti is exploring a controversial "Filter 2.0" strategy. This involves reducing the balance sheet's size through conservative asset valuations and quicker write-offs, effectively inflating capital ratios without actual new funds. Critics warn this could lead to a repeat of the Credit Suisse debacle, raising concerns about the credibility of regulatory frameworks and the potential for moral hazard in future financial crises.
Employees from Credit Suisse (CS) will enjoy a unique sabbatical policy, allowing three months of paid leave every five years, with full pay for the first month, 80% for the second, and 60% for the third. This arrangement has sparked controversy among former UBS employees, who do not have similar benefits and are concerned about potential dilution of their pension fund in the merger. UBS management plans to delay any discussions on merging the pension funds until after the integration of CS is complete, expected by 2027.
Colm Kelleher
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UBS committee faces scrutiny over Sergio Ermotti's controversial salary decision
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