Discover your dream Career
For Recruiters

Deutsche Bank just saved some of its highest paid bankers £900k each

Deutsche just threw some of its historic high earners a lifeline

Deutsche Bank is supposed to be saving money. Fortunately, it still has enough to keep some of its highest paid current and ex-employees happy.

The German bank, together with UBS, has just been found liable for unpaid taxes relating to a 'tax mitigation' scheme for employee bonuses in 2004.

Twelve years ago, around 40 London-based staff at Deutsche Bank who received bonuses in excess of £2m ($2.84m) were invited to invest them in 'Dark Blue Investment', a £91m Cayman Isles registered investment vehicle. As long as the 40 Deutsche bankers didn't sell their Dark Blue shares for five years, they were able to redeem them, entirely tax free, on 31 December 31. The wait was long, but it was worth it.

As of today, however, Her Majesty's Revenue and Customs (HMRC) is compelling Deutsche to pay £50m in back taxes on its Dark Blue wheeze; UBS is paying a similar fine on a scheme which was spread across a broader number of low earners.

HMRC's decision could have been disastrous for Deutsche's Dark Blue beneficiaries, each of whom would be liable for unpaid taxes of £900k or more. When J.P. Morgan's 'tax mitigation' scheme unraveled in December 2012, the bank made individual employees pay £200k each. Deutsche, however, is reportedly paying the fine itself. 

The German bank's kindness may raise eyebrows among its existing employees. Last week, Bloomberg reported that Deutsche is deferring 75% of all 2015 bonuses between €200k (£154k/$219k) and €500k for four years, with tranches vesting equally over that period. If you received a bonus of £250k at Deutsche Bank in London for 2015, you will therefore receive £47k a year before tax and £26k a year after tax (assuming you're taxed at 45%) for every year between now and 2020. And that might be clawed back if Deutsche makes a loss, which is all the more likely when it bails out high earners past.

Photo credit: Ingram Publishing/Thinkstock

author-card-avatar
AUTHORSarah Butcher Global Editor

Sign up to Morning Coffee!

Coffee mug

The essential daily roundup of news and analysis read by everyone from senior bankers and traders to new recruits.

Boost your career

Find thousands of job opportunities by signing up to eFinancialCareers today.
Recommended Articles
Latest Jobs
Larson Maddox
Senior Compliance Officer
Larson Maddox
Lawton, United States
Larson Maddox
Senior CRA Compliance Officer
Larson Maddox
Park Ridge, United States
Larson Maddox
Fair Lending Officer
Larson Maddox
Wichita, United States
Selby Jennings
Vice President, Private Credit
Selby Jennings
New York, United States
Selby Jennings
Managing Director - Portfolio Management
Selby Jennings
New York, United States
Selby Jennings
Private Credit Associate
Selby Jennings
New York, United States

Sign up to Morning Coffee!

Coffee mug

The essential daily roundup of news and analysis read by everyone from senior bankers and traders to new recruits.