In an attempt to recruit and retain star traders and key fund managers, and to establish a greater presence in the booming alternative inves...

In an attempt to recruit and retain star traders and key fund managers, and to establish a greater presence in the booming alternative investments market, UBS is planning to reward employees at its new hedge fund unit with an extraordinary guaranteed $1 billion in bonuses in the next 3 years. The $1 billion bonus pool has been set up by the world’s largest wealth manager in its newly created Dillon Read Capital Management hedge fund unit that will open for business in the new year. The new unit will be run by former UBS head of investment banking, John Costas. The new business’ 120-strong workforce will therefore receive average annual bonuses of almost $3 million a year for at least the next 3 years. But as the overall head count figure includes back office staff, those lucky enough to be in the front office could earn considerably more. Dillon Read is based mainly in New York and will be staffed predominantly by proprietary traders currently working in the bank’s principal finance and commercial property trading operations. The high-bonus strategy is designed to discourage the best traders from leaving to join independent hedge funds which have famously generous pay structures.