The unfortunate truth about pay at Deutsche Bank
When we suggested last month that Deutsche might be an incredibly good payer, most people disagreed.
Now Deutsche's US bankers appear to be confirming that their employer isn't the most generous in the world. According to the New York Post, Deutsche is losing staff over its compensation levels.
The Post points to the likes of Jerry Cudzil and David Malvern, two US credit traders, who are allegedly leaving for Morgan Stanley after being disappointed with their numbers. Merrill has poached from Deutsche in Asia, and Deutsche's star subprime trader is said to be leaving for a hedge fund.
But if Deutsche doesn't pay particularly well after all, what of those compensation per head figures which suggest it ranks second only to Goldman Sachs for its generosity?
One European banking analyst tells us she thinks she has the solution.
She says she suspects that headcount in Deutsche's corporate and investment bank is understated because the figure provided in the bank's quarterly reports includes only front office bankers. For the purposes of accounting, support staff are buried in other areas.
The 32,201 hidden employees
Hence, Deutsche had 14,177 people working in its corporate and investment bank at the end of Q4. They brought in €18.8bn of revenues over the year, and collectively earned around €5bn. But Deutsche also had 32,201 people working in 'infrastructure functions' listed elsewhere in its report under 'Consolidation & Adjustments.' They made negative revenues, and don't merit a compensation line.
Logic suggests that some of those infrastructure people must be paid out of the corporate and investment banking compensation pot. Deutsche's generosity is therefore likely to be seriously diluted.
In all fairness (to us), we're not the only ones to have fallen foul of Deutsche's funny accounts.
Last month, CreditSights issued a report suggesting Deutsche's bankers are among the most profitable in the industry, with income per head of €1,326, compared to €643 at BarCap and just €290 at UBS.
CreditSights analyst Simon Adamson tells us the Deutsche figures aren't necessarily comparable: "Barclays Capital has a very large staff number, which appears to include all their back office staff. On the face of it, Deutsche seem to have a low number of employees in their investment bank. It's hard to know whether they're assigning staff in the same way."
