Deutsche Bank AG, Germany’s biggest bank, allocated 7 percent less in pay to employees at its corporate and investment banking unit during the second quarter as the sovereign debt crisis curbed income from trading.
The company set aside 1.29 billion euros ($1.58 billion) for compensation and benefits to employees at the division that includes global transaction banking, compared with 1.39 billion euros a year earlier, the Frankfurt-based lender said in a filing today. The 14,542 employees at the unit earned 88,846 euros on average in the second quarter, down 1.8 percent from 90,452 euros in the year-earlier period, the document shows.
Investment banks are trying to reduce personnel costs to counter a decline in revenue as Europe’s sovereign debt crisis curbs trading and leads to a slump in stock and bond offerings. Pretax profit at the division declined 48 percent to 666 million euros in the period, Deutsche Bank said today. Deferred compensation expenses and a lack of flexibility helped to increase costs at Deutsche Bank’s securities unit, according to Kinner Lakhani, an analyst at Citigroup Inc.
“Costs disappointed,” Lakhani, who has a neutral rating on the shares, wrote in a note. “The bank highlighted increased legal and regulatory expenses although we believe that deferred-compensation expense pressure and lack of compensation flexibility has played a part.”
Debt-trading revenue at the division fell to 2.18 billion euros from 2.35 billion euros. Revenue from arranging stock offerings plummeted 64 percent to 89 million euros, while income from debt underwriting shrank 11 percent to 284 million euros in the period.