(Updates with Commerzbank statement in fifth paragraph.)
Oct. 13 (Bloomberg) -- Commerzbank AG, Germany’s second- biggest bank, won dismissal at the country’s top labor court of 13 cases filed by former Dresdner Kleinwort investment bank employees over 2008 bonuses.
The Federal Labor Court in Erfurt said the bank had the right to cut the bonuses by 90 percent after Dresdner Kleinwort suffered more than 6 billion euros ($8.2 billion) in losses during the financial crisis. The court ruled against the bank in three separate cases that it said were covered by labor agreements.
Commerzbank was forced to tap Germany for 18.2 billion euros of capital during the credit crisis and cut 2008 bonuses for Dresdner employees from a 400 million-euro pool by as much as 90 percent. The reductions led to dozens of lawsuits in Germany and London.
“When determining the bonus in February 2009, the rules of equitable discretion were kept,” the court said in an e-mailed statement. “With a view to the losses it wasn’t inappropriate to considerably reduce the bonus.”
Three cases brought by former Dresdner employees were granted by the top judges because they were covered by an agreement brokered by the lender’s works council. Under those rules, bonuses were due once the bank had decided that it would pay them and on average they reached one to two monthly payments. The 2008 were reduced to 1,000 euros which was contrary to these rules, the judges said.
Investment Banking Cases
Commerzbank sees the investment banking cases as a confirmation that Dresdner was entitled to take the action because of the dramatic deterioration of the bank’s financial situation at the end of 2008, company spokeswoman Margarita Thiel said in an e-mailed statement. The bank will study the court’s written judgment in the labor agreement cases, she added.
One of the plaintiffs in the investment bank cases was told in a Dec. 19, 2008 Dresdner letter that his bonus was “preliminarily” set at 172,500 euros. After the cut decision, he only received 17,250 euros, according to the court’s statement. The banker had lost his suit in two lower courts and appealed.
Today’s cases are BAG, 10 AZR 756/10 et al., and 10 AZR 649/10 et al.
--Editors: Anthony Aarons, Peter Chapman
To contact the reporter on this story: Karin Matussek in Berlin at firstname.lastname@example.org
To contact the editor responsible for this story: Anthony Aarons at aaarons@Bloomberg.net.