Commerzbank AG must pay bonuses to 10 bankers in Singapore at its now-defunct Dresdner unit, who claimed the lender breached their contracts by refusing to pay, a judicial official ruled.
The former employees had claimed they were entitled to S$9.5 million ($7.5 million) in bonuses and were induced to stay on because Dresdner’s then Chief Executive Officer Stefan Jentzsch pledged in August 2008 the payments would be made the following February. Commerzbank disputed Jentzsch’s authority to bind Dresdner to a contract.
“I find that Dr. Jentzsch was expressly authorized to make the 18 August announcement which was intended to be legally binding by Dresdner Bank,” Singapore Judicial Commissioner Lionel Yee wrote in a 68-page ruling made public today. Judicial commissioners in Singapore have the powers of a judge and are appointed to a specified term.
Commerzbank won’t appeal the ruling on the “Dresdner legacy issue” as it would unnecessarily expend resources, Margarita Thiel, a spokeswoman at the bank said in an e-mail. “Commerzbank continues to believe that Dresdner Bank was entitled to reduce its employees’ 2008 discretionary bonuses in light of Dresdner’s large investment banking loss for 2008,” she said.
Dresdner cut employee bonuses by 90 percent in February 2009, following its acquisition by Commerzbank a month earlier and in the aftermath of the global financial crisis. The German lender bought Dresdner from Allianz SE. It also sought an 18.2 billion-euro ($24.8 billion) bailout in 2009 from Germany.
Courts in Germany, Japan and Italy have ruled in the bank’s favor in similar disputes over bonus payments. Commerzbank in April was ordered to pay about 50 million euros to 104 Dresdner bankers after a U.K. appeals court refused to overturn a judge’s decision.
“I’m really happy for them as they’ve been vindicated,” said Kenneth Tan, a lawyer for the 10 bankers in Singapore.
The case is Daniel John Brader & Ors v Commerzbank AG (CBK) S486/2011. Singapore High Court.
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