UBS cuts bonus pool despite return to profit

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The Independent Online

UBS, the Swiss finance giant, was finally able to report a return to profit yesterday, four years after its last period in the black, but said it still planned to cut the bonuses paid to bankers. It is also continuing its policy of not paying a dividend to shareholders.

UBS, one of the banks in Europe most damaged by the financial crisis, said it had made a SFr7.2bn (£4.7bn) profit last year – its first year in the black since 2006 – compared with a SFr2.7bn loss in 2009.

The bank said it had also nowarrested the outflows of money from its accounts that was prompted by the US Government's attacks on Swiss banking secrecy. UBS was hit hardest by the US inquiry into the overseas assets of its citizens when customers withdraw tens of billions of Swiss francs in the immediate aftermath of the affair.

But it said yesterday that the trend had reversed during the second half of last year, albeit with inflows to its crucial wealth-management business slowing to a trickle during the final quarter of the year.

As in Britain, bankers' bonuses have been hugely controversial in Switzerland, prompting UBS toreduce its payouts by SFr500m to SFr4.3bn for 2010, though critics have claimed that many senior bankers have been handed big pay increases as compensation. Executives, including UBS's London-based staff, are now expected to hear what they will be paid individually on Friday.

Oswald Grübel, UBS's chiefexecutive, who was appointed to the post two years ago this month, said he was relieved that the company had finally put its loss-making years behind it but gave warning that there was much more work to be done to restore the bank to health. "While we made substantial progress in 2010, we are fully aware that we have to continue to improve our results," he said.

Piers Brown, a banking analyst at Evolution Securities, said UBS's results were better than expected, describing them as "an encouraging set of numbers", though he added: "There may be some disappointment at the lack of moneyinflows in wealth management."

UBS said it expected the pace of inflows to pick up during the first half of 2011.

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