Deutsche Bank's bonus boost crimped by bonus cap as someone receives €6m salary

Deutsche Bank's annual report is out today. Demand for the document was so great that the bank's investor relations website crashed. It reveals that Deutsche Bank bonuses for 2024 were pretty fine: 

• The bonus pool in the investment bank rose by 32%
• The average bonus paid to each employee in the investment bank rose by 36% to €152k
• The average bonus paid to material risk-takers (highest earning bankers, traders and control staff, typically managing directors) rose 50% to €966k

The breakdown of average salaries and bonuses and their historic precedents are shown in the charts below. 

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As has been various pointed out, Deutsche Bank's generosity to its material risk-takers shunted some people into very high pay bands. Deutsche paid 12 people between €7m and €8m last year and one person there earned €18m, something which has not occurred since at least 2018.

This feat of generosity came despite the fact that Deutsche Bank remains crimped by the European Union's bonus cap. Today's report clearly states that Deutsche falls under European regulatory rules and that it will pay bonuses no more than 2x salary, even as other banks in London prepare to pay bonuses of 25X fixed pay. 

In order to pay someone outside the executive committee €18m, therefore, Deutsche Bank will need to have paid someone a salary of €6m. Who was that person? Deutsche Bank isn't saying, but insiders suggest either Chetankumar Shah, who runs credit trading, or Ram Nayak, who co-heads the investment bank. 

The ongoing bonus cap suggests that most of Deutsche's high earners are on salaries far larger than those at US banks. Insiders confirm that this is the case: salaries of €1m+ are common at Deutsche, says one. 

This could prove challenging to the bank as rivals switch to a pay for performance model in London. "People are paid simply for being bureaucrats at Deutsche Bank," says one senior trader, who says compensation can't flex to adequately reflect revenues. 

Deutsche Bank seems to have done a good job of flexing in 2024, but presumably only by hiking fixed pay for top performers. The question now is whether it will be able to cut salaries and bonuses back down again in 2025.  

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