UBS, Morgan Stanley cutting Asia investment banker bonuses

Across the major banks, managing directors and executive directors are facing the biggest reductions of between 9 per cent to 12 per cent. PHOTOS: BLOOMBERG, REUTERS

HONG KONG (BLOOMBERG) - Global banks, including Morgan Stanley and UBS Group, are cutting investment banker bonuses in Asia after deals cooled, with senior employees taking the biggest hit, people familiar with the matter said.

The Asia ex-Japan bonus pool at UBS' investment-banking unit fell about 14 per cent last year, while Morgan Stanley's is about 9 per cent lower, the people said, asking not to be identified because the matter is private. Citigroup, which had its best fourth-quarter at the business since 2017, reduced its pool by about 6 per cent as it zeroed in on costs, a person familiar said.

Goldman kept overall bonuses largely flat, though it raised spending on variable compensation for top-performing bankers, another person said. Goldman arranged fewer stock sales last year in the region excluding Japan, ranking fifth and trailing Morgan Stanley and Citigroup, according to data compiled by Bloomberg. It also fell to the second place in mergers advisory from the top spot in 2018.

Asia has struggled to maintain a long boom, in part as China's economic growth has slowed to a three-decade low, pressured by the US trade war and tightening bank liquidity. Deal-making in Asia, excluding Japan, waned last year. The value of mergers dropped by 9 per cent, while the stocks sold in the region were the lowest since 2013, Bloomberg data shows. A compression in fees has also continued, one of the people said.

UBS underperformed last year as it took a hit from being suspended from sponsoring equity sales in Hong Kong, the world's busiest initial public offering (IPO) market. The Zurich-based lender has also trimmed costs and is restructuring its businesses as part of a global revamp. Earlier this month, the bank was again cleared to sponsor IPOs in Hong Kong.

Morgan Stanley cut the Asia bonus pool after collecting lower merger and acquisition fees, the person said, with overall investment banking revenue declining about 12 per cent, a person said. The bank had a record year for the business in 2018, boosting its bonus for the region by the double digits, the person said. Citigroup's Asia investment banking revenue rose 4 per cent last year, a person said.

Media representatives for all the banks declined to comment.

Across the major banks, managing directors and executive directors are facing the biggest reductions of between 9 per cent and 12 per cent. Bonuses for vice-presidents are largely flat, while most associates got a slight raise, the people said.

Total compensation for performing senior bankers ranged between US$1.25 million (S$1.7 million) and US$1.75 million, depending on the geographical location and sector coverage, people familiar with the industry trends said. For junior managing directors, the range was US$1 million to US$1.25 million, they said.

Globally, banks have benefited from buoyant markets and added stimulus. In particular, JPMorgan Chase, Morgan Stanley and Citigroup saw blow-out quarters on their fixed-income desks at the end of last year.

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