Three former executives who helped UBS to a SwFr4.4 billion (£2.19 billion) loss last year will share in a SwFr90 million payout from Switzerland's biggest bank.

But the “Pharaoh-like” pay of Marcel Ospel, UBS chairman, was cut by 90 per cent to SwFr2.5 million for 2007 after the 58-year-old presided over SwFr18.4 billion of writedowns - the worst sustained by any European bank in the credit crunch. The rest of the bank's executive board missed out on their performance bonuses for last year.

Slashing the chairman's pay is unlikely to appease shareholders, who will use next month's annual general meeting to demand again that Mr Ospel is dismissed. The SwFr90 million payout to former executives is expected to raise farther the ire of investors.

Peter Wuffli, who was ousted as chief executive of UBS last year, and Huw Jenkins, who stepped down as chief executive of UBS's investment banking business, shared a SwFr33 million payment for 2007 with Clive Standish, the bank's financial officer, who retired last year.

According to UBS's annual report released yesterday, the three bankers will be paid a further SwFr15.3 million this year and SwFr45.3 million in 2009. Mr Jenkins, who left his job last October after his division revealed a SwFr4 billion writedown on its fixed-income portfolio, will continue to work as a consultant at the bank until September.

The report said that UBS was obliged to make the payout because the three executives were “contractually entitled to receive base salary, pro-rata incentive and certain employment benefits until the expiry of their 12-month notice periods”.

Mr Ospel had already said that he would not expect a bonus for 2007, while his pay for 2007 will fall from SwFr26.6 million in 2006 to SwFr2.5 million.

In the report, the Swiss bank said that its board relied on an annual assessment and its own judgement on the “chairman's performance and contributions” when setting his compensation.

Mr Ospel admitted during an extraordinary meeting last month that UBS had failed to “recognise the signals from the US housing market in time”. He said: “There's no doubt that we judged a number of developments wrongly.”

In its letter to shareholders accompanying yesterday's report, Mr Ospel and Marcel Rohner, the UBS chief executive, again acknowledged that there had been “structural issues” that had contributed to the “very bad outcome” the bank experienced last year. In 2006 UBS had reported a SwFr12.3 billion profit.

Shareholders last month approved a vital capital injection by GIC, the Singaporean sovereign wealth fund, which will pay SwFr11billion for a 9percent stake in the bank, and an unnamed Middle Eastern investor, who will put in SwFr2 billion.

UBS cut Mr Ospel's proposed term of office from three years to one - he will face re-election at the general meeting on April 23 - but he has resisted calls from fund managers to step down entirely. Even the Swiss President has weighed into the discussion on the UBS chairman's performance.

Pascal Couchepin said that Mr Ospel had earned “Pharaoh-like salaries for four to five years”, but was not forced to return the cash when the bank's profits plunged.

UBS does not break down the pay of its executive board, which, including Mr Rohner, was paid SwFr39.1 million in total last year. Under Swiss law, banks must identify only the highest-paid member of the executive board. Last year the best-remunerated board member was Rory Tapner, the chief executive and chairman of UBS's Asia Pacific business, who received SwFr10.3 million.

Yesterday analysts predicted more pain for UBS this year. Dirk Hoffman-Becking, an analyst for Sanford Bernstein, said that the next hit would be on wealth management divisions, as deteriorating markets reduced the value of assets under management. Private banking was also likely to suffer in the first quarter of this year, while Swiss banks will be negatively impacted by foreign exchange effects, he said. “We expect wealth management assets overall should deteriorate by 5percent, and as a result of asset mix, CSGN [Credit Suisse] and UBS could see a 7 per cent weakening,” Mr Hoffman-Becking said. Shares in UBS closed up by more than 14 per cent at SwFr28.02 each.

Times Recommends

• Lies and cover-up at MG Rover exposed by report
• High oil prices push manufacturing costs up
• Primark founder steps down as chief executive