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Deutsche Bank and the incredibly generous redundancy payouts

This may not come as any consolation if you worked at Deutsche and happen to have lost your job just before bonuses were announced, but it seems the bank pays some of the best severance packages around.

Based on headcount reductions over the year, Deutsche’s fourth quarter results suggest the average severance payment in the corporate and investment bank during 2008 was €229k (199k).

This compares very handsomely with Goldman, which paid an average of $85k (58k) and Morgan Stanley, which (based on an estimated 5,000 job cuts during 2008) paid an average of $158k (108k).

Deutsche’s results go to show that it’s best to be let go sooner rather than later. Although payouts were measly in the first quarter, average severance payouts in Q2 were €2.3m, falling to €558k in Q3 and €236k in Q4.

One employment lawyer who works for DB scorns the notion that severance packages are lavish however: “Deutsche are in line with most other banks. The average across the industry is 3-6 months’ salary, rising to a year for the longest serving and most senior staff.”

Comments (30)

Comments
  1. Average severance package 199 k….where on earth did you get those figures.At Deutsche payoffs are in line with market norms…ie 3 months and then rising with seniority/time served. If you think therefore that most people will therefore receive 6 months (at most) you would be suggesting an average of 388,000 salaries .Use some Nous
    Sarah and read into the figures rather than dividing cost by headcount reduction

  2. The figures are from Deutsche’s report and are derived from severance costs for the corporate and investment bank divided by layoffs. Obviously the average is not reflective of particular payoffs. It may also be skewed if DB got rid of a lot more people than changes in its headcount figures indicate (ie. if it hired as well as laid off).

    However, the average is suggestive of a bank’s generosity towards the employees it’s letting go. Comparing the average across different firms also provides an indication of their relative generosity.

    Sarah, Editor, eFinancialCareers Reply
     
  3. sarah, reducing leveragewidely reported DB got rid of some senior equity derivative/ credit/ prop traders at the end of last year. presumeably at high cost.

    readthepaperssarah Reply
     
  4. Why do banks give such high redundancy payouts????? They have absolutely no reason to pay more than the bare minimum level which is like 2-3mths. Everything else is a complete stupid waste of money, now is not the time to waste money, its time to give me a better bonus not spend it on bad people!!

  5. Thanks. Doesn’t explain why payouts were low in Q4 though.

    Sarah, Editor, eFinancialCareers Reply
     
  6. Hey Razal
    hopefully, you have your “signed” bonus letter already!
    It’s unbelievable you dare complain more than those people who got fired just before bonuses and who will probably spend the next 6 months or more to look for a new job!
    It is because of people like you that the industry is seen as greedy by the general public!
    Well good luck for your bonus, and pray not to be the next, because remember, “it’s not finished yet!”

    BankersFashion Reply
     
  7. BankersFashion,
    Err, the people who got fired, deserve to get fired, because they were underperformers. Why should I have to suffer anything because of them, when I just had a record year?

  8. You had a record year on your own trading did you Razal ? You could it all on your own couldn’t you ? So why don’t you ?

    If not then you are reliant on your company to make money and therefore you are paid whatever they decide to pay you.

  9. Razal you are a nincompoop, braggard and a prat……most people laid off were not poor or underperformers ..i guess that you are just very junior and arrogant through stupidity

  10. Indeed Razal must be quite young and stupid too… that time has gone long time ago and nowadays lot of people made redundant were far from bad

  11. Sarah, to answer your question, fourth quarter packages are indeed lower simply because there is no money left… like everywhere else

    Regarding average package at 199 k… pure nonsense indeed… please try again as you must have a better answer if this is your sector! and this is an interesting question here

  12. Razal doesnt know much about the industry… Impossible that this guy is doing prop with such arrogance. Razal, pray my friend! pray!

  13. Razal you are stupid, ignorant and probably a big sucker, go get me a cappuccino

  14. Derreck – I’m reliant on the company, but not the other divisions like equity prop, M&A, absolutely NOTHING to do with my performance. I don’t help them, they don’t help me, I shouldn’t have to suffer because of their failures.

    OldTimer – you have to be kidding me. The OVERWHELMING MAJORITY of people who got laid off were poor / underperformers. When you have 3 people from a team of 12 leaving, its always the 3 worst. And the fact that many are young is no excuse, if people are young but stand-out they’ve all been saved. Hate pathetic excuses for people’s failures, the excuses why they got made redundant are hilarious.

  15. Zerbeline – That’s the average package according to annual severance payments and the annual reduction in headcount in the corp and investment bank given in the annual report. As I said above, they may be skewed by the fact that Deutsche could have let go of more people than overall headcount changes suggest – ie. if it hired as well as let go.

    Sarah, Editor, eFinancialCareers Reply
     
  16. totally agree! there are some incredidibly succesful people who’s number just comes up for one reason or another- i know plenty of $50 sales and trading pros who got made redundant. As for the size of the payout, it has more to do with unvested stocks etc. Since we have seen a lot of big hitters go this redundancy round you see there stocks vest and so the apparant payout will seem higher.

  17. Razel

    I didn’t see you complaining about those areas of the bank when they were making money and aiding your bonus. A bank is made up of all its components, so if it is losing money, all employees should reflect that. You arrogant, jumped up little git.

  18. You still don’t get it do you Razal …

    Of course you are not dependent on other divisions, but the company you work for *depends* on these divisions. It needs them to build a reputation, a reputation that allows you to do business and make money.
    Your company are paying you what they think you are worth. If you think otherwise, leave, and demonstrate that they are wrong.

    My bet is that you cannot move; in which case your company should be paying you less, not more.

  19. Dear Sarah,

    My advice is to use your industry contacts to explain the numbers if they seem unusual. Anyone can pull out the financial reports and do a calculation, the real value add from quality publications is to be able to provide some insight which the average person could not have worked out themselves.

  20. Thanks Anon, This was a quick post based purely on the figures. It;’s common practice among news providers to average payouts, and as no one else had done it on this occasion, and I felt it suggested an interesting trend, I followed up. This obviously doesn’t show the whole picture. If anyone at Deutsche wants to elucidate, go ahead.

    Sarah, Editor, eFinancialCareers Reply
     
  21. I agree with Anon, we want some added value here as i am sure you would agree the average 199k does not tell much. This is skewed but no because they have hired at same time… more likely because of a few big ones and vested stocks.

    Sarah – what do you think of package = one month of salary x number of years worked ? and maybe a little extra too

  22. Razel does’nt know anything obviously, except maybe that he won’t get paid that much in the future and that’s why he’s so angry… The good point about this article with the average 199k is actually to pisted off people like Razel with a crap bonus! Thx Sarah!

  23. Zerbeline – I’ve been told that package is fine and in line with what many other people are receiving, particularly if notice is extra.

    Sarah, Editor, eFinancialCareers Reply
     
  24. Razel …….Yet again we seem to have junior traders boasting about massive bonuses and that the folks laid off were underperformers ……. sigh ……. who left the nursery gate open. The days of this sort of arrogance are drawing to a close, the industry is changing, the storm clouds are gathering in the form of hacked off political leaders and their regulator attack dogs ( 250 are being groomed by the FSA at the moment). An election is due in 18 months, and to pollies need to draw blood – guess who will be first on the list after today’s headlines!!! As for only poor performers being fizzed, that is amusingly naive. Being targetted for redundancy is a mix of many factors, performance is one of them, but one man’s star performer is another’s loser. Razel, take some advice from an experienced person if you are mature enough, your bosses’ political savy is more important than your P&L – your book can always be handed over to someone else. In this market, good performers are being fizzed cos performance just ain’t good enough any more. Fella, you never hear the bullet that gets you. Don’t keep too many personal effects in the office, too difficult to take home in a bin liner.

  25. Agreed with Zerbelin, i believe this was in line with the street average end of last year. It will be interesting to see what is the trend in 2009 if this carries on… i have heard some banks have started to pay the minimum legal amount only…

  26. Sarah, what are your thoughts on UBS redundancy package ? given that there is no cash for bonuses?!

  27. This is the danger with numbers, the dataset is not normally distributed. The best estimate would be that it is leptokurtotic (excessively peaked and fat tailed). The average is meaningless as it will be skewed by outliers (MDs who signed two year guarantees in 07/08 and now they realise that they just need to get rid off them). The average DB redundancy from what I have seen from friends is just your average i.e. minimum of 3mths plus other adjustments for length of service.

  28. Anon – Due to snow chaos etc I haven’t had a chance to find out what UBS is paying now, but in early 2008 its payouts were apparently small – 3% of total annual comp for the previous year.

    Sarah, Editor, eFinancialCareers Reply
     
  29. Hi Guys, when you say 3 months + based on time served, do you mean to say 3 months notice period wage + x amount of money for time in service?.

  30. DB pay 1 month for every year served and 3-6 months on top of that plus unpaid holiday plus you get your share contributions back and what DB matched. and thats a fact jack !

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