Bloomberg the Company & Products

Bloomberg Anywhere Login

Bloomberg

Connecting decision makers to a dynamic network of information, people and ideas, Bloomberg quickly and accurately delivers business and financial information, news and insight around the world.

Company

Financial Products

Enterprise Products

Media

Customer Support

  • Americas

    +1 212 318 2000

  • Europe, Middle East, & Africa

    +44 20 7330 7500

  • Asia Pacific

    +65 6212 1000

Communications

Industry Products

Media Services

Follow Us

Fitschen Clashes With Schaeuble on Bonuses for Bankers

Don't Miss Out —
Follow us on:

March 11 (Bloomberg) -- Deutsche Bank AG co-Chief Executive Officer Juergen Fitschen clashed with German Finance Minister Wolfgang Schaeuble over whether European draft rules that limit bonuses will hamper banks’ ability to compete in some markets.

“Do you imagine that you can successfully compete in dynamic emerging markets if the German economy minister tells you how much you can pay your top executives in China or Russia?” Fitschen, who sat next to Schaeuble, said at a conference in Berlin today. “You can’t build a leading position with second- and third-tier people.”

Schaeuble took issue with Fitschen’s position.

“The next crisis of this magnitude won’t just cost us our market economy system but our western democracy as well,” said Schaeuble, 70. “Those who know that must take the debate a bit more seriously than to say it’s tough to find employees in emerging markets.”

European leaders are toughening bonus and capital rules for banks to prevent a repeat of the taxpayer-funded bailout of lenders following the 2008 collapse of Lehman Brothers Holdings Inc. While banks should hold more capital to resist financial shocks, the bonus rules mean that lenders will stay out of some markets or act in them at greater risk, said Fitschen, 64.

Schaeuble said that while Fitschen’s statement is correct “in part,” the bonus rules must be implemented to make the finance industry more stable with stricter capital requirements.

Bonus Limits

European Union parliament lawmakers have insisted that the law, which would apply capital and liquidity rules to the bloc’s 8,000 banks, include binding limits on bonuses. Under a draft deal struck last month, bankers would be banned from receiving discretionary pay worth more than twice their base salary, with a special accounting treatment applied to parts of the bonus that are deferred for at least five years.

Deutsche Bank, which didn’t take direct state aid after the 2007 meltdown of the U.S. housing market, is reducing pay to boost profitability. The Frankfurt-based firm typically pays bonuses in cash and shares over three years and defers the variable compensation of its top 150 executives by five years, according to company documents.

“I trust the creativity of global banks that they won’t go down because of this regulation,” Schaeuble said. “The rules limit the room for maneuver but one can also raise the fixed part of salaries. This can be easily solved in global companies which span several judicial zones.”

To contact the reporters on this story: Nicholas Comfort in Frankfurt at ncomfort1@bloomberg.net; Patrick Donahue in Berlin at pdonahue1@bloomberg.net

To contact the editor responsible for this story: Frank Connelly at fconnelly@bloomberg.net

Please upgrade your Browser

Your browser is out-of-date. Please download one of these excellent browsers:

Chrome, Firefox, Safari, Opera or Internet Explorer.