Bloomberg News

Deutsche Bank Cuts Investment Bankers’ Pay as Earnings Slump

February 02, 2012

(Updates with bonus pool reduction in fourth paragraph.)

Feb. 2 (Bloomberg) -- Deutsche Bank AG cut pay for employees at the corporate and investment bank by 15 percent in 2011 after income at the division plunged, following Wall Street competitors in reducing remuneration.

Germany’s biggest bank set aside 5.05 billion euros ($6.7 billion) for compensation and benefits compared with 5.91 billion euros in 2010, according to company filings today. That was enough to pay an average of 332,785 euros to the 15,184 employees at the division, which includes transaction banking, down from 378,659 euros a year earlier, the documents show.

The world’s biggest lenders are curbing pay as they grapple with shrinking revenue. Morgan Stanley, Credit Suisse Group AG and Citigroup Inc. have all reduced senior investment bankers’ pay for last year as revenue slows. The Frankfurt-based lender’s corporate and investment banking division posted a 138 million- euro loss in the fourth-quarter as income from fixed-income and equities trading shrank.

Deutsche Bank shrank its bonus pool by 17 percent, Chief Executive Officer Josef Ackermann told reporters today. Bankers will receive 37 percent less cash than last year as part of their bonus, while about 61 percent of the total amount will be deferred, he said.

The bank said today fourth-quarter profit fell 76 percent, more than analysts estimated, as Europe’s debt crisis curbed trading and the company wrote down its Greek government bonds. Net income fell to 147 million euros, missing the 556 million- euro average estimate of 12 analysts surveyed by Bloomberg.

‘Wait and See’

Financial firms worldwide are facing public and political pressure to limit bankers’ compensation after taxpayers were forced to bail out the industry during the financial crisis. Deutsche Bank, which didn’t require direct state aid, announced 500 job cuts at the investment bank in October to reduce costs as tougher regulation weighs on profitability.

Anshu Jain, head of the investment bank who will take over as co-CEO at the end of May, said he’s not expecting any more “dramatic” job reductions. Ackermann said today that if the situation worsens, the company would need to consider further measures.

“Let’s wait and see how the first quarter goes and European crisis gets addressed and resolved,” Chief Financial Officer Stefan Krause said later in an analyst call when asked about the likelihood of future job cuts. “Then we will have to make a decision.”

--Editors: Edward Evans, Jon Menon.

To contact the reporters on this story: Aaron Kirchfeld in Frankfurt at akirchfeld@bloomberg.net; Nicholas Comfort in Frankfurt at ncomfort1@bloomberg.net

To contact the editors responsible for this story: Frank Connelly at fconnelly@bloomberg.net; Edward Evans at eevans3@bloomberg.net


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