Bloomberg News

Commerzbank ‘Broke Promise’ Over $518 Million Bonus Pool

January 26, 2012

(Updates with Commerzbank statement in sixth paragraph.)

Jan. 25 (Bloomberg) -- Commerzbank AG broke a pledge by its Dresdner Bank unit to pay bonuses from a guaranteed pot of 400 million euros ($518 million), lawyers for a group of bankers suing the German lender said today.

“This case boils down to people keeping their promises and not saying one thing and doing another,” attorney Andrew Hochhauser said in London court today, the first day of the trial over the dispute.

More than 100 bankers sued Germany’s second-biggest lender in the U.K., claiming they were guaranteed a bonus pool in 2008 by Stefan Jentzsch, then Dresdner chief executive officer. Commerzbank completed a takeover of the bank in January 2009 and slashed bonuses by 90 percent or more, according to court papers from the former Dresdner bankers.

Hochhauser said Commerzbank executives, including Chief Executive Officer Martin Blessing, knew a commitment had been made and “moved the goalposts.” Both Blessing and Jentzsch will appear as witnesses at the trial.

Frankfurt-based Commerzbank said record losses at Dresdner in 2008 justified the decision to reduce bonuses. The lender has faced other lawsuits in London, Germany and Singapore from workers who said they weren’t paid what they were due after the 2009 takeover.

Commerzbank said in an e-mailed statement it planned to “mount a vigorous defense” to all the claims made against it.

Job Security

The 400 million-euro pot was established to stop key bankers from leaving because of a restructuring that left staff “worried about their job security and future,” Hochhauser said. The U.K. Financial Services Authority had identified the risk of an exodus of employees and had placed Dresdner Bank on a watch list of vulnerable firms.

The bankers’ cases include: Mr. Fahmi Anar & Others v. Dresdner Kleinwort Limited, Commerzbank AG, High Court of Justice, Queen’s Bench Division, HQ09X05230 and Richard Attrill & 71 others v. Dresdner Kleinwort Limited, Commerzbank AG, HQ09X04007

--Editors: Anthony Aarons, Christopher Scinta

To contact the reporter on this story: Kit Chellel in London at cchellel@bloomberg.net

To contact the editor responsible for this story: Anthony Aarons at aaarons@bloomberg.net


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