Deutsche Bank’s decision to give its top echelon employees a massive bonus has led to protests about how incongruous such a payout was in these challenging times for the rank and file employees.
The bank increased bonuses for its investment bankers by 46 percent in 2020, after a pandemic-driven trading boom led to the bank posting its first annual profit in six years.
According to its annual report published on Friday, the bank’s bumper bonus totaled a staggering €1.9bn, which is 16 times Deutsche’s net profit in 2020. In actual terms, almost half to its profit has been allocated as pay for its preferred employees.
The two highest earners received between €9m and €11m each. The bank has 16,200 investment bankers making up 20 percent of the bank’s total workforce but is receiving 47 percent of all bonuses, with more than half of it being paid out in cash.
Union Investment, Germany’s third-largest asset manager and a top 15-investor in Deutsche, was unhappy and “highly critical” of the pay decision. “The imbalance between bonuses and dividends is blatant,” said Vanda Rothacker, Union’s corporate governance expert.
Another surprising factor about paying bonuses at th this time is because the bank has been facing constant losses since 2015, amounting to nearly €14.6bn. For the past several years, the Frankfurt-based bank was trying to turnaround and restructure the bank to save costs. It also suspended dividend payments to shareholders for the second year in a row.
Though, the bank has promised to resume the dividends by next year and pay back €5bn to investors from 2022. The past year has seen Deutsche’s share price more than double at about €10.63, but it has still not reached the levels of 6 years before. The bank is still trading 6 percent below the level it was trading at in April 2018.
Christian Sewing, the chief executive of the bank, has increased his pay by 46 percent to €7.4m. Overall, the executive board’s pay increased to a total of €50m, compared with €36m a year earlier. Furthermore, the banks’s bonus offsets the one-month pay waiver that the top executives were asked to undertake in May last year due to the Covid-19 pandemic and the related troubles.
Jan Duscheck, a representative of Verdi service sector union, criticized the bank’s pay policy. He objected to the bank paying out bonuses to the higher-ups with no such compensation for the lower rank employees. “Such a remuneration policy creates an extremely poor image of the bank and it should be urgently corrected,” Duscheck said in a statement to Reuters.
The number of staff earning more than €1m or more rose 17 percent to 684 last year, from 643 in 2018.
It is reported that Deutsche had wanted to increase its bonus pool to above €2bn, but that plan was thwarted by the European Central Bank, the region’s top banking regulator. “Deutsche Bank recognized the current economic situation and the recommendation of the ECB and took this into consideration when making its compensation decisions,” the annual report said. The bank stressed that the bonus level was “prudent” as it needed to pay its employees “according to their performance and in line with market conditions”.
“It doesn’t fit with the times that Deutsche Bank, which has also indirectly benefited from bailouts time and again, is having a coronavirus party,” Fabio De Masi, a member of Germany’s parliament, said in a statement to Reuters.
