Deutsche Bank Cuts Investment Bankers’ Pay as Earnings Slump
Deutsche Bank AG (DBK) cut pay for employees at the corporate and investment bank by 15 percent in 2011 after income at the division plunged, following lower compensation at Wall Street competitors.
Germany’s biggest bank set aside 5.05 billion euros ($6.7 billion) for compensation and benefits compared with 5.91 billion euros in 2010, according to company filings today. That was enough to pay an average of 332,785 euros to the 15,184 employees at the division, which includes transaction banking, from 378,659 euros a year earlier, company filings show.
The world’s biggest lenders are curbing pay as Wall Street firms grapple with lower revenue. Morgan Stanley (MS), Credit Suisse Group AG and Citigroup Inc. have all reduced senior investment bankers’ pay for last year as revenue slows.
Deutsche Bank cited lower performance-related pay in today’s release. The German firm reported a fourth-quarter loss at the corporate and investment bank, leading to a 33 percent decline in full-year pretax profit. Net revenue slumped 12 percent for the year amid a decline in fixed-income and equities trading.
Financial firms worldwide are facing public and political pressure to limit bankers’ compensation after taxpayers were forced to bail out the industry during the financial crisis. Deutsche Bank, which didn’t require direct state aid, is also cutting costs and announced 500 job cuts at the investment bank in October as tougher regulation weighs on profitability.
Anshu Jain, the head of the corporate and investment bank, said on Jan. 26 the firm and its competitors haven’t seen a “significant” loss in skilled employees as regulators put restrictions on pay. He takes over as co-chief executive officer at the end of May.
“We have not seen a significant diminution of talent in the industry, I would dare say, and certainly not at Deutsche Bank,” he said in an interview with Bloomberg Television at the World Economic Forum in Davos, Switzerland. “We’re committed to paying competitively for the best talent.”