Dresdner Kleinwort former Chief Executive Officer Stefan Jentzsch, who left the investment bank after last month’s takeover by Commerzbank AG (CBK), is forgoing his 2008 bonus as the industry grapples with the worst financial crisis since the Great Depression.
Jentzsch “didn’t exercise a right” to receive his 2008 bonus, Dresdner Bank spokesman Martin Halusa said today. He didn’t provide a figure, saying the size of the bonus will only be known when the Frankfurt-based lender publishes 2008 earnings. Dresdner Bank said yesterday that the group’s former CEO, Herbert Walter, decided to forgo any bonus payment for 2008.
Commerzbank, the German lender that completed the 5.1 billion-euro ($6.6 billion) acquisition of Dresdner Bank from Allianz SE (ALV) in January, is reviewing bonus payments promised to Dresdner Kleinwort bankers. Allianz said in November it had earmarked a bonus pool of about 400 million euros for Dresdner staff, including money to keep employees from leaving the bank.
Compensation for bankers has become contentious after the financial crisis forced governments to use taxpayer money to prop up lenders. Frankfurt-based Commerzbank is receiving 18.2 billion euros from a financial-industry rescue fund set up by the German government. A decision on bonuses will be made next week, Commerzbank CEO Martin Blessing said yesterday.
Unprofitable banks shouldn’t pay bonuses, Blessing said, raising doubts as to whether Commerzbank will grant them to Dresdner bankers. He described Walter’s decision to forgo his bonus as a “strong signal.”
Dresdner Bank reported a loss of 2.37 billion euros in the first nine months of 2008, compared with a year-earlier profit, because of writedowns at the securities unit. Munich-based Allianz is scheduled to report full-year earnings, including numbers for its Dresdner Bank operations, on Feb. 26. Commerzbank, Germany’s second-biggest lender, is due to publish earnings on Feb. 18.
Deutsche Bank AG (DBK), Germany’s biggest bank, will cut bonuses by 60 percent on average, and Zurich-based Credit Suisse Group AG (CSGN) by about 55 percent, people familiar with the situation said this month, after the industry racked up more than $1 trillion of losses and writedowns on credit-related assets. Neither Deutsche Bank nor Credit Suisse has taken a government bailout.
Investment bankers at Dresdner Kleinwort may sue over pledged bonus payments, the Financial Times Deutschland said on Feb. 10, citing unidentified people close to the securities unit.
Commerzbank fell 8.5 percent to 3.22 euros in Frankfurt electronic trading.
To contact the reporter on this story: Jann Bettinga in Frankfurt at email@example.com