Chillin' out till it needs to be funded
Tuesday wakes up to UBS results showing a nosedive that automatically necessitated pay cuts to the tune of 40% , including Base pay and the shrinking bonus pool despite the head count reductions
UBS is also busy with getting the SNB nod by agreeing to float COCos with loss absorbing equity approved by the Swiss regulator(FINMA) for its 2012 Capital Drive. Swiss Law requires UBS to get to 19% of assets as Basel III capital
Swiss bankers expect UBS to go to Asia for the subscription of its perpetual 5 year bonds built along the lines of the other Crown jewel Credit Suisse
CS sold its CHF 6 bln offer to Qatar and The Olayan Group according to Reuters
Cocos are perpetual and have Tier II portions that fall into equity when the Tier I limit of 7% is breached
Rabobank has also tried such a structure with a permanent write down of bonds to equity on breach of Tier I Capital below 8% , keeping it at AAA based on the new CRDs. Banks await the new CRD4 later this year clarifying Basel’s position on perpetuals and write down notes.
Bankers at UBS London, in Kweke Aduboli’s department were resigned to 0( Null) bonuses this year. UBS profits fell 77% this year to 393 mln Francs, less than a sixth of its pre crisis profits after the frenetic compensation action. Even the Wealth bank reported profits of less than half at 650 mln Francs