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UBS, one of the City's biggest employers, today declared it was hiking its bonuses by 34 per cent for 2009 as it reported its first quarterly profit in more than a year.
The bank's bonus pool amounts to Swfr2.9 billion (£1.7 billion), compared with 2008's Swfr2.16 billion.
However, UBS said that was a reduction on what it would have been before it decided to defer some payments to 2010 and beyond.
UBS was the worst affected of all the continental European banks by the financial crisis, and said today withdrawals of funds by wealthy clients accelerated in the fourth quarter of the year.
However, despite the Swfr45.2 billion of those net redemptions, UBS still managed to make Swfr1.21 billion in the quarter, helped by lower costs of servicing its debts and a tax credit worth Swfr480 million.
The shares fell heavily as investors were shocked at the high level of redemptions.
Chief executive Oswald Grübel, who is not getting a bonus, said it still had to pay top dollar to its staff to compete with rival banks: “Our top performers are paid to stay, as we'd hate to lose them,” he said.
UBS last year was among the banks to boost salaries in order to decrease staff's reliance on bonuses amid calls to make bankers less prepared to take huge risks.
UBS employs 6200 people in London, a decrease from 7000 a year ago.
