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(Bloomberg) -- UBS Group AG has put salary increases on hold at its investment bank, including for employees who are promoted, as it waits to see how compensation at competitors develops, according to three people familiar with the matter.

Adjustments will probably be made in the middle of the year, a practice the Zurich-based bank used last year as well, said the people, who asked not to be identified in discussing internal affairs. The decision to defer pay increases doesn’t affect bonuses.

Hana Dunn, a spokeswoman for UBS, declined to comment.

UBS has pulled back from bond trading in recent years to focus on wealth management, meaning the bank missed out when bond trading picked up in the fourth quarter. Revenue from foreign exchange, rates and credit trading dropped 12 percent to 341 million francs ($342 million). Andrea Orcel, who heads the securities unit, said in an interview last month that the bank pays for performance, and while 2016 was “not bad,” it wasn’t as good as the prior year.

“Clearly, this year and last year, given the resurgence of fixed income, we have been lagging on revenues,” he said in a Bloomberg interview at the World Economic Forum in Davos. He said he’s “mildly” optimistic for 2017 with regard to client activity, which is the main driver for the investment bank after it shrank trading for its own account.

Orcel told employees at a townhall meeting two weeks ago that they will have to work with the resources at hand, according to people who attended. He said employees needed to take market share in the businesses the bank is in, because he won’t expand massively in areas such as rates and credit trading that consume too much capital. He praised the performance of the equities division in the fourth quarter and said cost cuts and adjustments to the bank’s model will help competitiveness.

UBS’s investment bank employed about 4,700 people at the end of last year, down from about 5,200 a year earlier. Orcel said in Davos that the bank is now the right size.

Compensation costs at UBS’s investment bank amounted to about 40 percent of the unit’s revenue last year, compared with about 36 percent in the prior two years.

--With assistance from Jeffrey Vögeli To contact the reporters on this story: Jan-Henrik Förster in Zurich at jforster20@bloomberg.net, Ruth David in London at rdavid9@bloomberg.net. To contact the editors responsible for this story: Michael J. Moore at mmoore55@bloomberg.net, Christian Baumgaertel

©2017 Bloomberg L.P.

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