Deutsche Bank cut its bonus pool for 2016 performance by 80%, a senior executive said, a move which will affect around 25,000 senior employees.
The cuts are “of course frustrating,” Karl von Rohr, the lender’s chief administrative officer, told German newspaper Frankfurter Allgemeine Sonntagszeitung in an interview.
“But we have very consciously decided to do so also with a view to our shareholders,” von Rohr said.
He said that around 5,000 on the bank’s most important employees would be enrolled into a long-term incentive plan, earning shares locked up for six years.
News leaked last month that Deutsche Bank is scrapping performance-linked bonuses for senior staff but this is the first time we have had any concrete figures on how many people the cuts affect and to what extent. Deutsche Bank’s bonus pool was €2.4 billion in 2015.
Deutsche Bank posted a loss of €1.4 billion (£1.2 billion) for 2016, citing restructuring and “negative news flow” around a fine from the US Department of Justice.
CEO John Cryan said at the time: “Our results for the year 2016 were heavily impacted by decisive management action taken to improve and modernise the bank, as well as by market turbulence for Deutsche Bank.”
2016 presented the firm with unique problems. Cryan has tried to simplify the business, cut costs, and reduce litigation and fines from poor conduct, as part of a plan started in October 2015. But the bank has seen its profit margins cut by low central bank interest rates and tough capital rules.
Shares plummeted close to 30-year lows in September after reports the bank would receive a $US14 billion (£11.2 billion) fine for mortgage-backed security misselling in the run-up to the financial crisis.
The fine would have been more than the Deutsche Bank’s market capitalisation, sparking concerns from clients and investors alike about the bank’s financial stability. The DOJ settlement was eventually finalised at $US7.2 billion (£5.8 billion).