Bonus Drought Over as Deutsche Bank Seeks to Retain Talent

(Bloomberg) -- Deutsche Bank AG’s bonus pool is almost back to normal, even if little else is.

Germany’s largest lender is awarding its staff 2.2 billion euros ($2.71 billion) in variable compensation, according to its annual report published on Friday. That approaches the level seen in 2015, when Deutsche Bank’s bonuses were broadly in line with its peers, and before Chief Executive Officer John Cryan began cutting back as the bank’s revenue shrank.

Cryan is reversing a dramatic 80 percent cut in bonuses last year that prompted a flight of top talent from the Frankfurt-based lender. Investment bank co-heads Marcus Schenck and Garth Ritchie reportedly fought for a return to more competitive compensation as they seek to regain market share lost after a crisis of confidence in the bank about 18 months ago.

Investment bankers are set to receive slightly more than half the total bonus pool, with variable compensation including awards for new hires equal to 1.42 billion euros. The number of Deutsche Bank employees earning more than 1 million euros rose to 756 last year from 316 in 2016.

Cryan himself earned 3.4 million euros in total compensation. He announced at a conference last weekend that Deutsche Bank’s management board will waive its bonuses for a third year running, meaning the CEO of Europe’s biggest investment bank hasn’t seen a penny of variable compensation since he took the job in mid-2015.

The decision by the bank’s leadership to forgo the lion’s share of their compensation for last year came after a backlash among politicians in late January, with the German government publicly urging Deutsche Bank to take public perception into account when making its decisions. The lender had previously disclosed a third straight annual loss.

Cryan acknowledged in his letter that the decision to raise bonuses was “highly contentious” but argued that the bank didn’t have a choice. “We have to invest in our employees so that we can continue to provide the best solutions for our clients,” he wrote. “In the interests of the bank, we could not repeat our previous decision not to pay any individual variable compensation to most of our senior staff for 2016.”

The bank’s travails -- and last year’s payments cuts -- have impacted morale. Employee commitment to the bank as measured by an annual survey has fallen to the lowest point since at least 2006, according to the bank’s human resources report, also published Friday. The survey was taken in the months after the traditional bonus payout month of March.

Cryan also wrote in the letter to shareholders that the decision by the board not to pay itself any bonuses was intended “to send a clear signal and ensure its own remuneration remains aligned to the bank’s net results.” The decision had been influenced by considerations of public perception, he said at a conference in Austin, Texas last weekend.

The bonus pool at Deutsche bank compares with about $3.3 billion at Zurich-based rival UBS, while Credit Suisse -- which awarded 3.09 billion francs in bonuses in 2016 -- is boosting the overall pool by about 3 percent for last year. French rival Natixis SA boosted its bonus pool by 10 percent, the bank said earlier this month.

To contact the reporters on this story: Steven Arons in Frankfurt at sarons@bloomberg.net, Nicholas Comfort in Frankfurt at ncomfort1@bloomberg.net.

To contact the editors responsible for this story: Dale Crofts at dcrofts@bloomberg.net, Paul Armstrong

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