Deutsche Bank Unit Cuts Pay for Five Executives on Japan Penalty
Deutsche Bank AG (DBK)’s Japanese securities unit will cut pay for five senior executives and increase compliance staff after regulators penalized the firm for excessive spending on entertaining pension fund officials.
Japan’s Financial Services Agency ordered Deutsche Securities Inc. to improve operations for providing special benefits to the pension clients, the regulator said in a statement in Tokyo today. The brokerage’s Chief Executive Officer Makoto Kuwahara will receive a 20 percent pay cut for six months, the firm said in a statement.
Deutsche Securities becomes the first brokerage to be penalized in Japan for breaching rules on client entertainment after the regulator found it spent 6.3 million yen ($61,300) on officials at three pension funds. The order comes a week after an employee at the firm was arrested on suspicion of bribing a manager of Mitsui & Co.’s retirement fund.
Japanese regulators have been beefing up oversight of the pension industry since it found that asset manager AIJ Investment Advisors Co. covered up more than $1 billion in client losses last year. For Deutsche Bank, Germany’s largest lender, the breach adds to regulatory woes as legal costs mount amid probes into interbank rate rigging and lawsuits related to the U.S. housing market.
Deutsche Securities Chief Operating Officer Bret Dandoy and Chairman Norimichi Kanari will each receive a 30 percent pay reduction for six months, Takayuki Inoue, a spokesman for the firm, said by telephone in Tokyo today.
The brokerage will bolster staff at its compliance department by June and punish employees who spent too much on clients, it said in the statement.
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