Remember Christian Bittar? He was the Deutsche Bank proprietary trader who, in 2008 alone, was due a bonus of $53m for his work and who allegedly earned $100m+ over the decade he toiled at the bank. If you work for Deutsche, those days could not be more over.
Following our report on Monday that Deutsche would be deferring 100% of bonuses for the vast majority of staff, Deutsche Bank insiders say 90% of people from VP level to MD level (directors included) have been told their bonuses will be entirely deferred for 2016.
"They're being given zero cash so that the bank can say it paid no bonuses this year, but some are being told they're still getting stock," said a source. "That stock is 100% deferred."
Deutsche's managing directors and executives are already familiar with the practice of paying mostly in stock. The German bank deferred 85% of the compensation for its top MDs in 2014 and last year, Deutsche MDs took a hit at bonus time in order to compensate their subordinates. This is the first time, however, that Deutsche has squeezed pay for vice presidents, and this is expected to cause big problems.
VPs at Deutsche can be as young as 27 or 28, with AVPs younger still. Unlike more senior staff, they don't own their own houses in London: they either have big mortgages or aspire to have big mortgages. Senior VPs and directors have big mortgages and young children. As such, depriving them of cash bonuses means one thing: cash flow problems.
"People are super unhappy," says one DB insider. "These are comparatively junior bankers and they have a huge need for cash."
In theory, Deutsche has mitigated the impact of zero cash bonuses by increasing salaries. Figures from Emolument last year suggested the average front office VP at Deutsche is on around £100k.
Either way, the staff who form the backbone of Deutsche's corporate and investment bank are purportedly in shock. "There are a lot of directors at Deutsche who've been waiting for salary increases, but didn't get them," says the insider. "The bank has placed its mid-ranking staff in a very difficult position."
Deutsche declined to comment on claims about its bonuses. However, a statement on the bank's website says employees at VP, director and MD level will only receive the 'group variable component of compensation' this year. The wording suggests this applies Deutsche's assistant vice presidents too.
Headhunters said the 'group variable component' will be a mere 10% of standard bonuses at Deutsche and will be contingent on the bank meeting certain group-level targets rather than on individual performance. There are also reports that the bank has asked staff to sign non-disclosure agreements relating to this year's pay structure for the first time, although insiders denied this. Analyst and associate bonuses will be paid, but will be "limited."