UBS will award bonuses to 6,500 senior bankers in the form of bonds that can be wiped out if the company doesn’t meet capital standards, according to the Financial Times.
Bloomberg reports that the program to benefit UBS’s highest-paid employees would make the bank the first to follow recommendations of European banking regulators, the newspaper reported, citing unidentified people close to the situation whom it didn’t identify.
Senior bankers should be required to receive some annual bonuses in bonds that would suffer losses during a financial crisis, the European Banking Authority said in December. A 'mandatory share' of bonuses for top management should be paid in so-called bail-in bonds, which can be written down when capital dips below a safe level, the regulator said in an opinion on proposals to separate banks’ commercial and investment units.
The debt bonuses awarded by UBS will be wiped out if the bank’s regulatory capital falls below 7% or in the case of a 'non-viability' loss, the FT reported.
Here Is The City understands that for staff paid more than $250,000 Swiss or USD (total comp), 60% of bonuses will be deferred - half of that in equity, half in the new debt instrument.
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