Deutsche Bank confirms 22% hit to bonuses in 2019

2019 payouts for Deutsche’s senior executives, including CEO Christian Sewing and group president Karl von Rohr, also fell

Deutsche Bank confirmed its staff bonuses dropped by around a fifth on average for 2019, as the group embarked on its “most fundamental transformation for 20 years”, in the words of chief executive Christian Sewing.

The German lender’s total bonus bill dropped from €1.9bn to €1.5bn in 2019, down 22%. Reuters previously reported the bonus pool was likely to fall by about this much, but Deutsche’s annual report, published on 20 March, showed this was not solely due to the bank’s substantial reduction in headcount over the year.

Deutsche’s pay supervisors also reduced the payout rate for its group bonus scheme to 60% of the potential maximum, from 70% during 2018. That meant the average variable pay per employee declined from around €21,200 to €17,300 last year.

Deutsche made a net loss of €5.3bn in 2019, worse than analysts had been expecting, driven by a radical restructuring plan it announced in July. That plan has involved the shuttering of Deutsche’s equities trading division and the loss of 18,000 jobs across the group. Only around 4,100 of those job cuts have so far been made; the rest are due by 2022.

Headcount fell by 4.5% during the year to 85,600, mainly due to job losses in equities trading, as well as cuts in group operations and private banking.

The overhaul aims to draw a line under several years of failed restructurings, and restore confidence in Germany’s biggest lender, whose share price has fallen 80% in the past five years — with 63 percentage points of that fall recorded before the coronavirus crisis began.

2019 payouts for Deutsche’s senior executives, including Sewing and group president Karl von Rohr, also fell, after the board waived their individual bonuses for the year. Although they had “achieved or surpassed all the operating targets that were announced in July”, the report said, “considering the bank’s radical transformation program and the consequences for employees and shareholders” they have decided to “waive these claims on a one-time basis”.

As a result, Sewing’s total pay dropped from €7m in 2018 to €5m last year, while von Rohr’s pay package declined from €5.5m to €4.4m. Chief risk officer Stuart Lewis took home €3.8m last year, down from €6.1m in 2018, and chief financial officer James von Moltke also earned €3.8m, down from €5.1m.

In its annual report, Deutsche offered scant detail on how it expects the Covid-19 pandemic to affect its business, with Sewing setting out in his letter to shareholders that “ it is still too early to assess how the COVID-19 pandemic will affect the economy, and for how long”.

While the report’s sections on its business targets and risks repeated that language, Deutsche added that “we may be materially adversely affected by a protracted downturn in local, regional or global economic conditions”.

Source: Financial News

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