Deutsche Bank bonuses reveal unexpected disappointment
Deutsche Bank was expected to increase bonuses in its investment bank for 2021. This doesn't seem to have happened.
Deutsche's 2021 compensation report, published today, reveals that the investment bank bonus pool was held flat last year, at €1,054bn, up less than 1% on 2020. That's not likely to have been popular given the big increases elsewhere.
As the chart below, based on the compensation report, shows, Deutsche simultaneously increased its spending on salaries in the investment bank. This seems to have been matched by a substantial increase in the number of employees (possibly due to the reclassifying of employees in support functions).
The pay figures for Deutsche Bank's material risk takers (top traders, bankers, control personnel and managers) provide a better idea of what's going on. Last year, the number of MRTs at Deutsche Bank increased by 33 people, but spending on their bonus pool fell from €716m to €699m.
Average pay for Deutsche's MRTs increased by virtue of the higher average salary, but their average total compensation fell to €1,454,509. Thirty of Deutsche's MRTs received no bonus at all.
And as the chart below shows, the number of people earning over €1m across DB also fell to 520, its lowest level for years.
What happened? Deutsche is blaming the fall in people earning €1m+ on, "a reduced number of retention and severance payments," which possibly explains why so many people are no longer in the €1m to €1.5m bracket. Notably, slightly more people appear to have been well-rewarded in the higher pay brackets.
Speaking at yesterday's Deutsche Bank investor day, CEO Christian Sewing and CFO James Von Moltke highlighted the importance of talent and retaining talent through competitive compensation to the bank's success. Today's compensation report suggests they might not want to retain everyone; it's worth remembering that bonuses for top performers in Barclays' investment bank were up 24% last year.
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