UBS’s (NYSE:UBS) wealth management operations in the Americas are overseen by Robert J. McCann, who also has the new honor of being the bank’s highest paid employee. McCann reportedly received a total payment package of 8.18 million francs ($9.9 million) in 2011; this includes his usual salary of 1.32 million francs.
Carsten Kengeter, head of the investment banking division, was once the highest paid employee before McCann took over. Kengeter turned down his bonus money after the bank recognized several large trading losses that were unauthorized. The CEO of UBS, Sergio P. Ermotti, took over the reins of UBS back in September 2011 and received 6.35 million francs, including his base salary of 1.39 million francs.
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Ermotti has been making some changes around UBS to fit the needs of a changing market. For instance, the CEO is cutting back the investment banking division and putting a heavier focus on the bank’s wealth management business that attracts high net worth investors.
As a whole, UBS cut back on bonuses by 40% to 2.6 billion francs. This change comes after profits for 2011 did not impress. The bank reported profits of 4.2 billion francs, down from 7.5 billion francs in 2010. The investment banking sector saw the worst of it with a 60% decline in bonuses.
UBS is a strong investment bank. Although it is headquartered in Switzerland, it fits in well with its American counterparts. The bank has seen some issues over the past year, especially when a rogue trader decided to loss the company billions on an unauthorized trade. Profits wise, UBS is pretty stable despite last year’s hiccup. Last year was a tough year for all investors due to an escalating European crisis and the US debt ceiling debates that ended with the US losing its AAA credit score.
UBS is not the strongest investment bank, in my opinion. In fact, all of the American investment banks have better balance sheets and in most cases, more efficient management. Analysts appear to agree with me because the big American institutions all have more buy ratings than the European institutions. This is due in part to UBS’s exposure to the debt crisis in Europe. Although the company has said that they believe they have successfully gotten through the crisis so far, analysts are saying that may not be the case and to expect a potential hit to UBS’s bottom line.