Deutsche Bank cuts bonus pool

FRANKFURT: Deutsche Bank AG cut its 2016 bonus pool by almost 80%, a figure unmatched in the bank’s recent history as it tries to recover from legal expenses that wiped out profit and eroded capital levels.

“The lender is reducing payouts with an eye toward shareholders and is aware it will be frustrating for employees,’’ chief administrative officer Karl von Rohr told Frankfurter Allgemeine Sonntagszeitung in an interview.

“The measures will affect about a quarter of the 100,000 staff,’’ the German Sunday newspaper cited him as saying.

The comments were accurately reported, a Deutsche Bank spokesman told Bloomberg yesterday.

Though Deutsche Bank told staff last month that it was scaling back bonuses, the full magnitude of the cuts hadn’t been reported.

The firm, which operates Europe’s biggest investment bank, saw its shares sink 23% last year amid rising misconduct costs and concerns about its financial strength.

In an effort to bolster profitability and build its capital buffer, chief executive John Cryan has eliminated jobs, suspended dividends and sold risky assets.

Philipp Haessler, an analyst at Equinet Bank AG in Frankfurt, said the reduction of almost 80% was more than he anticipated.

Deutsche Bank’s wider compensation expenses fell 11% to €11.9 billion ($12.6 billion) last year from a year earlier, company filings showed.

“Investors will be happy to see that costs go down, but the question is, will the best people want to leave or are there no jobs out there for them?” said Haessler.

“It’d be great if this helped keep personnel costs lower, but I’m sceptical on that given DeutscheBank’s track record.”

“Some workers in key positions — about 5,000 in all — will get a special, long-term incentive tied to the bank’s performance that will paid out after as many as six years,’’ von Rohr said.

Cryan told reporters this month that those awards were for “relatively few” people in revenue-earning areas, but also in “critical infrastructure functions and control functions where we are focusing a lot of our investment to improve the bank.”

“The bank hopes to resume normal service for the business year 2017 with regard to bonuses,’’ he said.