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Deutsche Bank said to scrap senior bankers' bonuses for 2016
[LONDON] Deutsche Bank AG will tell senior employees as soon as this week that they probably won't get a bonus for 2016 because of the lender's performance last year, according to a person familiar with the decision.
The decision to withhold bonuses for management board members and most top bankers across the firm was taken at the end of last year and isn't directly related to the cost of settling legal disputes, said the person, who asked not to be identified discussing internal matters. There will be some retention bonuses paid to the highest performers, according to the person.
The bank was rocked last year by concern about its capital adequacy, a 23 slump in its share price and rising litigation bills from Europe to the U.S. Chief Executive Officer John Cryan, 56, has eliminated jobs, suspended dividends and sold risky assets to shore up profitability and capital buffers. The bank on Tuesday reached a US$7.2 billion final settlement with the US Justice Department over its sales of mortgage securities before the financial crisis. It's still seeking to end an investigation related to its Russian unit.
Most junior Deutsche Bank employees have already been shifted into fixed salaries, so the decision to scrap bonuses won't affect them.
A spokesman for the company declined to comment.
In the autumn, the bank had explored alternatives to cash bonuses including paying staff with shares in the non-core unit or Deutsche Bank stock.
Last year, Deutsche Bank awarded staff 2.4 billion euros (S$3.64 billion) of bonuses for 2015, 1.45 billion euros of which was for the combined investment banking and trading unit, according to the bank's annual report. Of the 2.4 billion euros, 49 per cent was deferred stock and cash while the remainder was paid out immediately.