Commerzbank AG (CBK) must pay 50 million euros ($65 million) to 104 bankers at its now-defunct Dresdner unit after a U.K. appeals court refused to overturn a judge’s decision that the German lender must honor its promises on bonuses.
There was overwhelming evidence justifying the conclusion that the bonus promises made to the bankers were intended to be legally binding, Justice Patrick Elias said in a ruling in London today.
Commerzbank, which reduced bonuses by 90 percent after taking over Dresdner in 2009, argued a 6.5 billion-euro loss at the unit justified the move, even though Dresdner executives promised employees the previous year money would be set aside for compensation.
While banks try to combat or avoid European Union proposals for some of the world’s toughest pay curbs, Commerzbank has fought legal battles in Germany, Italy and Japan to defend its bonus cuts. At the 2012 trial in London, Chief Executive Officer Martin Blessing said he wanted bankers to be motivated by loyalty not money.
The ruling “is a triumph for common sense and for some very well-established principles of English contract law,” Clive Zietman, the lawyer for 83 of the bankers, said in a written statement. “It is a great pity that the bank saw fit to contest so vigorously and for so long, a case that could so easily have been avoided.”
Commerzbank bought Dresdner from Allianz SE (ALV) in January 2009, the same year it took an 18.2 billion-euro bailout from Germany at the height of the financial crisis.
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