Deutsche Bank’s compensation report is out. For anyone wondering what salaries are bonuses were like on average at Deutsche’s corporate and investment bank for last year, all is now clear.
Firstly, Deutsche Bank paid bonuses for 2017. Despite losses of €700m for the year, the bank said it felt compelled to offer performance pay because, “another year with drastically reduced variable compensation or no specific recognition of individual performance would have led to attrition risk with respect to both key employees that are critical to our future success as well as many other employees who all worked hard to help our bank navigate through times of continuous change. “ In other words, people would leave.
As the chart below shows, average salaries and bonuses for the 984 material risk takers (senior managers and people taking significant risk on behalf of the bank) at Deutsche Bank, compared favourably to pay at the investment banks of Barclays, RBS and HSBC, but less well to UBS which so far tops compensation for risk takers at European banks last year.
Notably, it’s bonuses that Deutsche remains weak on: while risk taker salaries at DB were an average of 13% higher than at UBS, bonuses were an average of 16% lower. Averages aren’t everything: as we reported previously, investment bankers at Deutsche Bank appear to have been very happy with their bonuses for 2017, but there’s clearly a reason why DB has a reputation for paying generous salaries.
Now that bonuses are back in DB’s investment bank, euro millionaires are back too. 385 people were paid bonuses of between €1m and €1.5m last year, compared to 183 last year and 330 in 2015.
At the top end, Deutsche’s population of the highest earners looks stable. For each earnings bracket above €3m the number of people was generally the same in 2017 as in 2015. The implication is that Deutsche’s gamble with 2016 bonuses paid off: high earners didn’t leave just because they were zeroed once.
It’s not all good news for Deutsche’s high earners though. The bank today confirmed the continued existence of its 4.5 year cliff vesting program for its, “senior leadership cadre” (defined as people reporting to the management board, significant influencers and “stewards” of the bank’s long term health and performance.” People in this category will see nothing of 2017 bonuses until mid-2021.
Deutsche also said today that it’s “decided to apply a stricter approach” to bonuses for its directors and managing directors. In future, the rate of deferral will increase rapidly for anyone earning over €130k (€50k) if they’re a material risk taker. And anyone earning over €500k in total compensation will have the entirety of their bonus deferred.
Deutsche also reiterated today that it doesn’t consider Goldman Sachs part of its peer group when it comes to compensation comparisons. Given some complaints about the level of bonuses at Goldman Sachs this year, this may be just as well.