Deutsche Bank Takes Further Aim at Bonuses as Cuts Continue

Deutsche Bank's group bonus pool is being targeted for a sizable reduction.

Deutsche Bank’s lean year has continued this week, after a further round of cuts to its bonus pool is set to create one of the tightest conditions for employees at the lender this decade. The bank’s employees were told to expect cuts of upwards of 50 percent to a group bonus pool, which will add a new layer to the already mitigated bonuses incurred last month.

Back in February, Deutsche Bank unveiled a cost reduction plan that affected nearly 100,000 staff globally. The cuts to its bonus pool were estimated to be almost 80 percent, with others instead receiving special long-term incentives dictated by the bank’s performance – this option was available on a more limited basis to around 5,000 staff members.

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Vanishing Pool

Bonus reduction strategies are nothing new, however the timing and speed of Deutsche Bank’s bonus pool has caused concern among its ranks. The past few years have been characterized largely by tapered rounds of job cuts, which started in late 2015 after the group initially announced that it would jettison upwards of 35,000 jobs over the next few years. These cuts were confined to the back-office and IT space, though trading desks have also felt the crunch.

Deutsche Bank
Bloomberg, John Cryan

The bank relies on a payment methodology that relies on both an individual and a group bonus, with the latter derived from an aggregated pool tied to Deutsche Bank’s performance. Its latest cuts will target this pool, which may for many portend a bonus of next to nothing, given the existing declines in individual bonuses.

For Deutsche Bank, CEO John Cryan will need to right the proverbial ship and instill confidence in an investor base that is growing increasingly frustrated, especially on the heels of its recent restructuring and capital raising plan, worth up to $8.5 billion.

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