UBS, Morgan Stanley cutting Asia investment banker bonuses as deals cool

Pedestrians pass beneath a UBS sign outside a UBS AG bank branch in Zurich, Switzerland, on Thursday, Oct. 23, 2014. Photographer: Gianluca Colla/Bloomberg

Global banks including Morgan Stanley and UBS Group AG 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’s investment-banking unit fell about 14% for last year, while Morgan Stanley’s is about 9% lower, the people said, asking not to be identified because the matter is private. Citigroup Inc., which had its best fourth-quarter at the business since 2017, reduced its pool by about 6% as it zeroed in on costs, a person familiar said.

Goldman Sachs Group Inc. 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 U.S. trade war and tightening bank liquidity. Deal-making in Asia, excluding Japan, waned last year. The value of mergers dropped by 9%, 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 hit from being suspended from sponsoring equity sales in Hong Kong, the world’s busiest initial public offering 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 lower merger and acquisition fees, the person said, with overall investment banking revenue declining about 12%, 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% 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% to 12%. 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 $1.25 million to $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 $1 million to $1.25 million, they said.

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

Bloomberg

Singapore Reporter/s

In Singapore, we are looking to double our reporting team by this year-end to comprehensively cover the fast-moving world of funded startups and VC, PE & M&A deals. We want reporters who can tell our readers what is really happening in these sectors and why it matters to markets, companies and consumers. The ability to write precisely and urgently is crucial for these roles. Ideal candidates must have to ability to work in a collaborative, dynamic, and fast-changing environment. We want our new hires to be digitally savvy and ready to experiment with new forms of storytelling. Most importantly, we are looking for hard-hitting reporters who work well in a team. Collaboration and collegiality are a must.

Following vacancies can be applied for (only in Singapore).

Following vacancies can be applied for (only in Singapore).   

  • A reporter to track companies/startups that have raised private capital, and have the potential to become unicorns. SEA currently has over 40 companies with a valuation of over $100 million and under $1 billion.
  • A reporter who can get behind the scenes and reveal how funding rounds are put together, or why they’ve failed to materialise. She/he in this role will largely focus on long-format stories. 
  • A journalist to track special situations funds, distressed debt and private credit (from the PE angle) across Asia.

Singapore Reporter/s

In Singapore, we are looking to double our reporting team by this year-end to comprehensively cover the fast-moving world of funded startups and VC, PE & M&A deals. We want reporters who can tell our readers what is really happening in these sectors and why it matters to markets, companies and consumers. The ability to write precisely and urgently is crucial for these roles. Ideal candidates must have to ability to work in a collaborative, dynamic, and fast-changing environment. We want our new hires to be digitally savvy and ready to experiment with new forms of storytelling. Most importantly, we are looking for hard-hitting reporters who work well in a team. Collaboration and collegiality are a must.

Following vacancies can be applied for (only in Singapore).

Following vacancies can be applied for (only in Singapore).   

  • A reporter to track companies/startups that have raised private capital, and have the potential to become unicorns. SEA currently has over 40 companies with a valuation of over $100 million and under $1 billion.
  • A reporter who can get behind the scenes and reveal how funding rounds are put together, or why they’ve failed to materialise. She/he in this role will largely focus on long-format stories. 
  • A journalist to track special situations funds, distressed debt and private credit (from the PE angle) across Asia.