Is Commerzbank paying really tiny bonuses?
The good news for people working in Commerzbank's corporates and market division is that bonuses are on the cards this year, but with a bonus pot of just €440m across the group many are likely to be feeling rather short-changed.
The bank has been swinging the axe fairly liberally in its investment bank throughout 2010, with average headcount its corporate and markets division now standing at 1,991, which is down from 2,755 at the end of 2009.
Much of the reduction is happening outside of Germany, with headcount in foreign markets declining by around 15% versus a 3% decrease in the bank's home country.
Commerzbank says it's 80% of the way through the staff cuts and says it's happened "faster than planned". Part of this may be down to the fact that, according to recruitment sources, it's got something of a retention problem on London.
"A lot of people are pretty miserable about their bonus payments, and we've placed a number of people from the bank in recent weeks," says one investment banking headhunter. "They're still able to attract people from out of the market, and it's a great place to go if you want a lofty job title. But while salaries are decent, it doesn't pay the kind of money to attract top people and bonuses have been appalling."
Bonuses haven't been broken out by business division, but Commerzbank CEO Martin Blessing said during the conference call that variable pay across the group amounts to 10% of total compensation costs - or €4.4bn - so a pot of €440m is on the table.
If this were to be share solely among the investment bankers (unlikely, admittedly) this implies an average payment of €221k, which doesn't compare particularly favourably with local rival Deutsche Bank's average pay per head of €355k.
Commerzbank is still battling claims from former Dresdner investment bankers for bonuses allegedly promised in 2008, who claim they were entitled receive around €50m.
But the fact it is paying bonuses at all shouldn't come as a complete surprise, after Reuters reported that it had cleared the payments with the German government for the "extraordinary" accomplishments of its employees.
It's also planning to repay a significant chunk of the government's funding this year, which could potentially pave the way for more generous bonus payments in future.
The poor bonus payments have been mitigated to some extent by the continuation of the 'stablisation' payments, whereby payments were made midway through the year to make up for a lack of bonus for 2009. This has worked as a retention tool to some extent, suggest headhunters.
Overall, the sentiment coming from Commerzbank's corporates and markets division has been relatively bullish, with a pre-tax profit of €786m for 2010 compared to a loss of €420m in 2009 on the back of "servicing an enlarged client base".
And the bank has made some senior hires in 2010, particularly in its fixed income division. Seven people joined the London team in November, following on a series of FX appointments in June and the recruitment of Nikolaus Giesbert as head of fixed income & currency sales in April.
But generally, it's struggling to attract talent: "It's not that there aren't good people left, but we get the impression they're biding their time until a better opportunity comes along," opines one fixed income headhunter.
