Deutsche Bank says ‘normal’ bonuses and pay rises are back
Deutsche Bank chief executive John Cryan has promised staff “normal” bonuses and pay increases for the first time in his two and a half years in charge, as Germany’s biggest lender emerges from its most turbulent period.
The happy new year for Deutsche’s bankers — confirmed by Mr Cryan in a weekend interview with Germany’s Börsen-Zeitung newspaper — is in stark contrast with 2017, which began with Mr Cryan abolishing 2016 performance-related bonuses for many senior staff.
The result was an unprecedented 80 per cent cut in bonuses for performance in the previous year. In early 2016, six months after he arrived at Deutsche, Mr Cryan presided over a 20 per cent cut in the investment bank’s bonus pool.
“We always said that we would return to our normal system of variable compensation in 2017,” Mr Cryan told Börsen-Zeitung. “And we will also raise salaries in some areas.”
Deutsche repeatedly argued that its 2017 bonus cull — described by one senior executive as “probably one of the most difficult decisions” the bank’s management board ever took — was a one-off.
But, despite the unique circumstances of a $7.2bn US penalty for mis-selling mortgage-backed securities and a costly restructuring, some staff doubted whether normal payouts would be resumed so quickly, especially after the decline in Deutsche’s investment banking revenues accelerated in the third quarter.
Staff who own shares have also ended the year with scant gains. While Deutsche’s shares were up 13 per cent in the year to date by mid December, reflecting a confidence-inducing €8bn capital raise and the resolution of the US mortgages issue, they fell sharply in the final two weeks of the year after the US announced tax cuts that reduced the value of corporate deferred tax assets.
Credit Suisse said it would make a SFr2.3bn ($2.3bn) write-off as a result of the tax changes. Mr Cryan said Deutsche was still analysing the effects of the reforms. “We will also be affected,” he said.
Laura Noonan in Dublin
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