Deutsche Bank's secret generosity to its longest-serving staff
Deutsche Bank's retention bonuses from earlier this year aren't going too well. You will recall that these special bonuses, paid to top DB staff to compensate for the annihilation of 2016 performance bonuses, will only be worth something if Deutsche's share price hits €23 in the first three weeks of 2021. When they were issued, Deutsche's stock was trading at over €19. Now, it's down to €13.3.
Even so, not that many senior DB staff have left. This might be because John Cryan is bringing the fun back. Or it might for some other reason, hitherto unknown. We'd like to suggest a candidate for the latter.
One Deutsche banker in the U.S. who isn't leaving says he's sticking around because of his pension. When he joined Deutsche Bank, he says the bank paid one of the most generous pension programs on the street. Although that program closed to new entrants ten years ago, it still covers DB veterans, most of whom are now in very senior roles.
How generous is generous? Deutsche declined to comment on the program, but we understand that it's based on the highest five-year average salary of the past decade. Bonuses don't count, but given that Deutsche has hiked salaries and downplayed bonuses for managing directors, this doesn't really matter.
"I joined the DB pension scheme as a bit of a joke," says the senior banker in the U.S business. "I didn't expect to be here longer than five years, but it's turned out to be like winning the lottery. I get to retire at 62 with a pension based on my salary. It helps that I've been getting good salary increases every year for five years."
Unfortunately, Deutsche's more recent joiners don't get the same treatment. We understand the contemporary U.S. pension scheme involves retiring at 65 on far smaller amounts.
The historic pension scheme means Deutsche's most senior bankers are unlikely to leave unless they're pushed - in which case the bank will need to pay severance. This is unfortunate for DB, which is still struggling with an unmanageably high cost base in the investment bank and was probably hoping some of its veterans would disappear of their own accord...