Bailed out Swiss bank UBS AG (UBS), which suffered a loss for a third consecutive year, has paid out $51.8 million in compensation to executive board members for 2009.
After repaying the $5.6 billion funds it received in 2008, the bank is now free to set its own compensation policies.
Among the board members, Carsten Kengeter, co-head of UBS’s investment bank, was the highest paid, receiving a total of $12.5 million. The ex-Goldman Sachs executive joined UBS in September 2008. Kengeter heads the fixed income unit, which was accountable for major losses at the bank, and has reassured that the unit will become profitable in 2010.
The bank paid out 2.9 billion francs in total cash bonus for 2009, 34% more than in 2008, when it reported the biggest net loss in Swiss corporate history. UBS earned losses due to its huge exposure to the U.S. mortgage securities market. The huge write-downs related to these exotic loans caused a loss of customer confidence, new money outflows in wealth management and a loss of key employees, which resulted in a loss of revenues in investment banking, especially in fixed income.
Estimate Revisions
Over the last 30 days, one of the 2 analysts covering the stock has lowered his or her estimate for the first quarter of 2010. There were no upward revisions during this period. Currently, the Zacks Consensus Estimate for the first quarter is operating earnings of 25 cents per share, which would be up 172.1% from the year-ago quarter.
The higher number of upward estimate revisions for the first quarter indicates a likelihood of upward pressure on the performance of the stock in the near term.
With respect to earnings surprises, the stock has not been steady over the last four quarters, with two positive surprises. However, the average remained negative at 47.8%. This implies that UBS has surpassed the Zacks Consensus Estimate by 47.8% over that period.
The downside potential for the estimate for the first quarter, essentially a proxy for future earnings surprises, currently stands at 8.0% for UBS.
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