Deutsche Bank bonuses: In-depth
Deutsche Bank’s annual report is out – and so are its pay numbers.
Despite a much weaker year for the investment banking landscape than 2021, Deutsche's bonus pool (variable compensation) for the investment bank fell 8% last year - not a bad number compared to the 50% contraction seen at Credit Suisse. The number of Material Risk Takers (senior staff) also increased by nearly a quarter - from 485 to 594.
Let's take a deeper dive.
Deutsche Bank bonuses weren't as good as Deutsche Bank's financial results
There was a disconnect between Deutsche’s great bottom line - €5.6bn, up 65% pre-tax YoY - and its stagnant bonus pool. The bank blamed this on “the current uncertain economic outlook” to “prudent capital planning and long-term capital stability,” and to its “ambitious cost targets.”
Although there was previously speculation as to just how much Deutsche Bank's high performing fixed income traders would get, the rest of the investment bank was a mixed bag. Its M&A team did well to keep revenues flat, but it had some of the less performant capital markets divisions compared to peers, in terms of revenue at least - ECM was down 81% and DCM 74% compared to 2021.
The Deutsche Bank bonus deferral labyrinth
Senior staff (directors and MDs) in a number of divisions, including the investment bank, are obliged to defer 100% of their bonuses above €500k ($532k) - and if their fixed pay exceeds that number, their entire bonus is deferred. Bad news if you like cash bonuses, in the style of those now paid at Credit Suisse.
Bonuses in Deutsche's investment bank - at a glance
Deutsche's overall increase in salaries isn’t surprising, and mirrors the increase at most banks, including Credit Suisse. The increase in staff numbers at the investment bank isn’t a surprise, either – Deutsche’s cost-cutting diet, which it started in 2019, left in slim enough to absorb staff as other banks are letting go of people.
Deutsche's investment bank - high earners
Deutsche Bank’s Material Risk Takers (MRTs) earned an average of €1.6m, down on last year's €1.8m, which isn't a surprise. The 17% decrease in average fixed pay (salaries), for MRTs, however, was a surprise, particularly in light of increases at Barclays and Standard Chartered.
MRTs are key bank personnel who have a “material impact on the risk profile” of a firm, meaning they’re either in charge of particular division, or high earners (or both). It’s a commonly used term at European banks including Barclays and HSBC, and usually means top traders, bankers, and high-level operational staff.
Deutsche paid more people over €1m than it did in 2021. However, it wasn't all good news. Most of those €1m+ earners were at the very bottom of the pay scale. Above €1.5m, Deutsche Bank paid fewer people really big numbers in 2022 than for the four previous years. Bad luck to its top credit traders after all.
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