Deutsche Bank AG, Europe’s largest bank by assets, plans to tell employees it will impose a 300,000-euro ($409,000) cap on bonuses being paid this year, said three people with knowledge of the discussions.
The cap, which will apply across the company, may be relayed to employees next week, said the people, who asked not to be identified because the plans are private. Senior staff, or what the bank calls “regulated” employees, will receive as much as 150,000 euros in cash, with the balance available in shares in August, the people said.
Banks are under pressure to rein in compensation and tie it more closely to performance after large cash payouts were blamed for encouraging the type of risk-taking that led to the 2008 collapse of Lehman Brothers Holdings Inc. and the subsequent financial crisis. Deutsche Bank will pay 3.2 billion euros in bonuses for 2012, down 11 percent from a year earlier, Chief of Compliance Stephan Leithner said yesterday.
The bank had a cap on immediate payouts of 200,000 euros last year, people familiar with the matter said. A Deutsche Bank official in London declined to comment on bonuses.
Deutsche Bank named a panel of business executives and a former German finance minister in October to review its pay system. The bank said Sept. 11 it will increase the vesting period for deferred bonuses for about 150 top executives to five years from three, and will make a single payout after the deferral period ends rather than staggered payments every year.
The Frankfurt-based lender yesterday reported a loss of 2.17 billion euros in the fourth quarter, the biggest in four years, as it eliminated more than 1,400 staff and set aside 1 billion euros for legal costs. Deutsche Bank’s investment bank employed 9,094 full-time front-office employees at the end of 2012, company filings showed.