Deutsche investment banking bonuses up 46% as bank returns to profit

Deutsche Bank increased bonuses for its investment bankers by 46 per cent in 2020, after a pandemic-driven trading boom propelled its fixed income trading division and drove the lender to its first annual profit in six years.

The bank’s investment bankers are sharing a bonus pool of €876m, almost eight times the size of Deutsche’s overall net profit of €113m in 2020, according to its annual report published on Friday.

The pay of Christian Sewing, chief executive, also increased 46 per cent, to €7.4m. Unlike in 2019, the 50-year-old boss of Germany’s largest lender did not waive parts of his variable pay. Overall, the executive board’s pay increased to a total of €50m, compared with €36m a year earlier.

The Frankfurt-based bank, which has racked up a cumulative loss of €14.6bn since 2015, is amid a costly turnround plan and has suspended dividend payments to shareholders for the second year in a row.

The number of employees earning €1m or more rose 17 per cent to 684 last year, the report said. This figure exceeds levels reached in 2018, before Deutsche began to scale back its investment bank, when 643 staff members earned €1m or more. The two highest earners in 2020 received between €9m and €11m each.

The lender’s 16,200 investment bankers represent 20 per cent of the bank’s total workforce but are receiving 47 per cent of all bonuses. The group-wide bonus pool rose 29 per cent to €1.86bn, with more than half of it being paid out in cash. Almost half of the variable pay will be deferred.

Deutsche had initially wanted to increase its bonus pool to north of €2bn, but that plan was blocked by the European Central Bank, the region’s top banking regulator.

“Deutsche Bank recognised the current economic situation and the recommendation of the ECB and took this into consideration when making its compensation decisions,” the annual report said. The bank stressed that the bonus level was “prudent” as it needed to pay its employees “according to their performance and in line with market conditions”.

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