Deutsche Bank drastically cuts 2016 bonuses
NEW YORK/FRANKFURT (Reuters) - Deutsche Bank (DBKGn.DE: Quote) has decided to cut bonuses drastically as it struggles to turn a profit and faces a big bill for litigation.
Germany's biggest lender has finalised a $7.2 billion settlement with the U.S. authorities over its sale of toxic mortgage securities in the run-up to the 2008 financial crisis.
"Now that we have a clearer idea of the financial impact of the settlement with the US Department of Justice and our performance for the year, we feel that tough measures are unavoidable," Deutsche Bank Chief Executive John Cryan said in a letter to staff on Wednesday.
Shareholders applauded the bonus cuts, which will hit about a quarter of Deutsche's roughly 100,000 staff.
"They are a necessary step in the longterm recovery of Deutsche Bank - just as the cancellation of the dividend is," Union Investment fund manager Ingo Speich said, adding Deutsche Bank would not be able to meet bank capital rules if it spent a lot of money on bonuses.
Another top investor said that Deutsche Bank needs to cut costs and the same time retain staff in order to benefit from an expected upturn in investment banking.
"Cutting bonuses after a bad year is better than laying off too many of the staff you will need to win business," the investor said, adding that Deutsche Bank on the other hand still had capacity to cut 5,000 backoffice staff.
Deutsche Bank's management board has decided to waive its own bonuses for 2016, Cryan said.
Employees with the titles of vice president, director and managing director will get no 2016 bonus, but will be offered a retention package. Continued...