Figures released yesterday from the European Central Bank suggested German households are among the poorest in the eurozone. Our own figures suggest German-focused investment bankers aren't doing too well either - at least compared to their colleagues in the City of London.
The pay discrepancy is best illustrated by new figures from Deka Bank, a German asset management and capital markets firm. Last year, domestically-focused, Frankfurt-based Deka paid its average employee €97k ($127k/£82k). In contrast, London-based asset manager Schroders paid its average employee $272k in 2012 and Jupiter Asset Management (also London-based) paid $251k.
Deka isn't the only German-focused financial services to be circumspect about compensation. The Munich-based corporate and investment banking arm of Hypo HypoVereinsbank, is also a comparatively poor payer, giving its average banker a total €178k ($232k) last year. This looks a lot, until you consider that Goldman Sachs paid $399k per head, that Jefferies paid $466k, or that Barclays paid its investment bankers an average of £190k ($291k). Only investment bankers at Royal Bank of Scotland earned less than HVB investment bankers for 2012 (an average of $197k per head). But RBS investment bankers work for a loss-making government owned institution. By comparison, investment bankers at HVB generated 77% of profits across the group last year, and increased profits in their unit by 44%.
Does comparatively poor pay at Germany's domestically-focused investment banks matter? Maybe. In recent years, moderately paid bankers in Frankfurt have been far more successful at keeping their jobs than highly paid bankers in London.
The main reason for the discrepancy, according to Dirk Becker, an analyst at Kepler Capital Markets who has worked in both Frankfurt and London, is that German-focused banks don't pay excessive bonuses. "You won't see many people in Frankfurt with eight-figure packages. They'll usually be working in other financial centres," he said. For many mid-ranking investment banking jobs, however, Becker said pay in Frankfurt isn't appreciably lower than in London - "German bankers are usually paid no more than 15-20% less."
The exception to the German poor-pay rule is clearly Deutsche Bank, which regularly tops league tables for investment banking compensation and operates its investment bank in the City of London. Under pressure from Frankfurt, Deutsche's pay structure is changing however. Co-chief executive Anshu Jain, former head of the investment bank, asked for his pay to be cut this year, bringing his pay in line with that of his more German-focused co-head Juergen Fitschen, who was being paid €2m less.