Why it makes sense to get made redundant from Deutsche's incredibly successful investment bank
Deutsche's corporate and investment bankers can feel very good about themselves. While all others were floundering last year, they were not. Today's fourth quarter results reveal that profitability at the unit rose an enormous 39% year on year.
Trading revenues even rose in the fourth quarter.
To some extent, Deutsche's great success is a vindication of its hiring strategy. As Dirk Hoffman-Becking of Bernstein Research points out:
"...the bright spot in Q4, 2010 was equities and advisory and underwriting, businesses that DBK had traditionally been underweight, indicating that the efforts to build up the presence are finally bearing fruit.
Those massive severance payments
On the other hand, Deutsche's enthusiasm for hiring seems to have hit a brick wall in the fourth quarter, when it reduced headcount in the corporate and investment bank by 1%.
169 people were let go from the corporate and investment bank in the final three months of the year. During that time, the bank spent €176m on severance payments, amounting to €1m on average per head for the pleasure of being made redundant.
On these grounds, it makes far more sense to be dismissed from Deutsche than to carry on. Average compensation per head for those remaining in employment was €355k (after deducting money spent on severance payments), up 2% on last year.
