UBS announced last week it will pay 2014 bonuses to certain staff in bonds that are designed not to work if capital ratios weaken, seen by commentators as a way of incentivising management to keep the Swiss bank on a sound capital footing.

UBS announced last week it will pay 2014 bonuses to certain staff in bonds that are designed not to work if capital ratios weaken, seen by commentators as a way of incentivising management to keep the Swiss bank on a sound capital footing.

The bank said it has “enhanced certain features of the employee compensation framework in anticipation of increased focus on tier one capital instruments.” The bonus system, introduced in 2012, is designed to “better align the interests of shareholders, bondholders and employees and to align compensation incentives with the capital strength of the firm,” it said.

Zurich-listed UBS also said it has not suffered aggregate losses from the previous week’s shock decision by the Swiss National Bank to stop capping the Swiss franc against the euro.

The bank issues full-year 2014 results on 10 February.

As reported by Reuters in a commentary, in 2013 bankers at UBS earning more than SFr300,000 or $300,000 received 40 per cent of their bonuses in tier two debt instruments that were deferred for five years but paid annual interest. Under the new plan, UBS intends to make these same payments in so-called additional tier one (AT1) capital, an even more subordinated form of debt.