Deutsche Bank Must Weigh Scrapping 2016 Bonus, Sewing Saysby
Lender scrapped 2015 management bonuses following annual loss
Christian Sewing commented in interview with Bild-Zeitung
Deutsche Bank AG’s supervisory board should discuss scrapping bonuses for top executives for a second year after Germany’s largest bank put dividend payments on hold, consumer banking chief Christian Sewing said.
“It’s clear that if we don’t pay our shareholders a dividend, then our own bonus needs to be up for debate as well,” Sewing, who sits on Deutsche Bank’s 10-member management board, told Bild-Zeitung. A spokeswoman for the Frankfurt-based bank said the comments were reported accurately.
Deutsche Bank Chief Executive Officer John Cryan, 55, has sold risky assets and eliminated thousands of jobs to bolster capital buffers and boost profitability, hurt by mounting legal costs and tougher regulation. The CEO scrapped bonus awards for top management and suspended dividends after the lender posted its first annual loss since 2008 last year.
The shares dropped 3.2 percent to 12.26 euros at 4:20 p.m. in Frankfurt. While the company has lost about 46 percent of its market value this year, Cryan has signaled that there’s no immediate need to raise capital.
“The question of a capital increase isn’t an issue at the moment,” Sewing, 45, told Bild-Zeitung. “The share price is very low but our aim is to return the bank to profitability in the long term. That would also boost the share price.”
Because Deutsche Bank has cut assets and built up equity and liquidity since the financial crisis, “regulators don’t see any immediate need for us to raise our capital,” he said. The lender is “on track” to reach its goal of a common equity Tier 1 ratio, a measure of financial strength, of at least 12.5 percent by the end of 2018, Cryan said last month.
Sewing, who leads the private, wealth and commercial clients unit, stood to earn a 2.4 million-euro ($2.7 million) salary and as much as 5.9 million euros in bonuses for this year, the company said in March. While Cryan’s theoretical “maximum” compensation under the bank’s formula is 12.5 million euros, he can’t actually receive that amount, as pay for management board members was capped to 9.85 million euros for 2016.
The size of any bonuses depends on the company’s performance. Cryan has already said that Deutsche Bank may fail to return to profit this year as it takes charges to eliminate staff and builds provisions for fines and lawsuits.
Sewing also said that Deutsche Bank doesn’t plan to pass the cost of negative interest rates to consumer clients. Other lenders will probably have to follow the company in charging account fees, the newspaper cited him as saying.