(Bloomberg) — UBS has frozen salaries at its investment bank at least until the second quarter when it plans to revisit compensation, according to three people with knowledge of the matter.

Even bankers and traders who have been promoted won't see their salaries rise for now, the people said. At last count, the securities unit employed about 5,200 people full-time in locations including New York, London, Hong Kong and Zurich.

UBS joins other European banks that have cut compensation, as the plunge in oil prices and China's slowdown cloud prospects for generating revenue. Credit Suisse and Deutsche Bank reduced bonuses after posting losses for 2015, while Barclays and HSBC both imposed a hiring freeze, with the later suspending raises as well.

The last three months of 2015 were particularly difficult for UBS's investment bank, led by ex-Merrill Lynch dealmaker Andrea Orcel. Buffeted by volatile markets that discouraged clients from trading, the division posted a 63% decline in profit.

UBS will review compensation in the second quarter in light of market conditions and business results, the people said, asking not to be identified as the discussions were private. The exercise will evaluate pay practices relative to competitors, with a goal of ensuring that compensation at UBS isn't out of line, one of the people said.


While the review could result in a belated increase in base pay, UBS will probably be very cautious about committing to higher salaries if the environment is still challenging, the person said.

Bonuses at the investment bank fell only slightly from a year earlier on average, and the bank believes overall compensation remains competitive with other lenders, one of the people said. A UBS spokesperson declined to comment on this year's pay policies.

CEO Sergio Ermotti said last week that the fourth-quarter was the "most challenging" for UBS in years and that risk aversion remains “very high" among clients, restraining investments and deal-making. Ermotti, 55, has reshaped UBS since taking over in late 2011, scaling back the investment bank to promote wealth management.

Personnel costs at UBS's investment bank, which include salaries, bonuses and other expenses, rose 8.6% to 3.22 billion francs ($3.26 billion) for 2015. That amounted to 36% of the unit's revenue, unchanged from 2014.

Fourth-quarter revenue from equities trading dropped 19% and that from advisory and underwriting tumbled about 8%. Revenue at the smaller foreign exchange, rates and credit business climbed 30%.

With assistance from Jeffrey Vögeli.

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