Executive pay Report: Deutsche Bank to Cut Bonuses 4%

Deutsche Bank, under pressure to boost profits as it restructures its main businesses, is cutting its performance-based compensation for top executives by 4 percent, Bloomberg reported.
Not everyone's happy - protesters accusing Deutsche Bank of "landgrabbing and defense industry investments."

Deutsche Bank plans to cut by 4 percent the money it spends on annual bonuses for many of its top managers, Bloomberg reported.

The bank, Germany's largest, paid €3.16 billion ($3.5 billion) in bonuses a year ago. Its managers will learn the exact levels of their 2014 bonuses on Monday, the news agency reported from Frankfurt.

The 4 percent reduction is an average for the bonus pool of money the bank spends on employees. It was unclear whether the bank's top managers -- many of whom have been at least partially shielded by increases in base salaries -- will have their overall compensation decline.

Bloomberg, citing unnamed financial industry sources, said some Deutsche Bank investment bankers -- especially those in underperforming units -- will see cuts in bonuses of up to 15 percent.

 

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The biggest bonuses traditionally go to the Frankfurt-based bank's investment banking unit. There, some bond traders will see cuts of 10 percent to 15 percent from their bonuses a year before.

But investment bankers involved in mergers and acquisitions and IPOs -- two businesses that performed relatively well in 2014 -- will see "only slight'' reductions in the size of their bonuses, the new agency reported.

Bloomberg cited financial community sources in reporting that the reductions in Deutsche Bank bonuses would also vary geographically.

Under E.U. rules, banker bonuses are limited to 100 percent of salary or 200 percent in exceptional cases.

The bank, which is struggling to maintain profitability amid fundamental challenges to its traditional universal banking model, plans to disclose details of its latest compensation packages on March 24.

The bank declined to comment on the report.

The cuts in bonuses are tied to the bank's move to raise some salaries. Citing financial sources, Bloomberg reported that Deutsche Bank had raised salaries for some full-time employees after the European Commission last year imposed a legal limit on the size of banker bonuses.

 

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Under the new E.U. rules, banker bonuses are limited to 100 percent of salary or, if shareholders approve, 200 percent in exceptional cases.

At the bank's earnings conference last week, the Deutsche Bank chief financial officer, Stefan Krause, said the total personnel costs for the bank's investment banking operations rose to €5.4 billion from €5.3 billion a year earlier.

Salaries were increased for the bank's top-level executives only, a member of the bank's works council, who declined to be named, told Bloomberg. The large majority of the bank's rank-and-file have had no raises in years, the labor representative said.

Salaries and compensation for bankers is much higher in the United States.

Last month, JP Morgan said its chief executive, Jamie Dimon, would receive an €18.5 million bonus for 2014. The U.S. investment bank earns roughly 10 times as much money as Deutsche Bank.

 

Laura de la Motte is an editor covering banks at Handelsblatt in Frankfurt. To reach the author: [email protected]